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Texas Department of Transportation Commission Meeting


Ric Williamson Hearing Room
Dewitt Greer Building
125 East 11th Street
Austin, Texas 78701-2483

Thursday, January 29, 2009


COMMISSION MEMBERS:

Deirdre Delisi, Chair
Ted Houghton, Jr.
Ned S. Holmes
Fred Underwood
William Meadows

STAFF:

Amadeo Saenz, Executive Director
Steve Simmons, Deputy Executive Director
Roger Polson, Executive Assistant to the
Deputy Executive Director
Dee Hernandez, Chief Minute Clerk

PROCEEDINGS

MS. DELISI: Good morning. It is 9:04 a.m. and I would like to call the regular January 2009 meeting of the Texas Transportation Commission to order. Note for the record that the public notice of this meeting, containing all items on the agenda, was filed with the Office of Secretary of State at 4:20 p.m. on January 21, 2009.

Before we begin today's meeting, please take a moment to put all your cell phones and other electronic devices on the silent mode, please.

As is our custom, we'll open with comments from the commissioners, and first I'd like to call on Commissioner Meadows.

MR. MEADOWS: Thank you, Madame Chair. I'm trying to check my cell phone right now, so if you'd give me just a moment to make sure that I complied with your request.

I'd just like to take a moment here this morning. I know we're going to have an opportunity to get into an agenda item that is of critical importance to the Metroplex and the northern part of our state, and at the risk of offending someone by not recognizing them -- and everybody here knows how risk adverse I am -- I would just like to acknowledge that Tarrant County Judge Glen Whitley is here with us this morning; I know Tarrant County Commissioner Gary Fickes is here; I know Mayor Trevino I see; I understand Mayor Tate is with us; I know City Councilman Jungus Jordan, a good friend of mine from Fort Worth, is with us. And I just really appreciate them taking the time to come to Austin today because it really does show their commitment and recognition of the importance of this project that we're going to consider later today, and I'm just glad to have them here, we really appreciate it.

MR. UNDERWOOD: Good morning. I have a couple of comments, Madame Chair. With the ongoing chance of a stimulus package or whatnot, it's going to be critical as we go forward that we do this the right way and whatnot, and I wanted to share something with the audience. I really enjoy working with these men and women because of the fact that they are basically CEOs of their own businesses or whatnot and they're used to having the final say, so then all of a sudden you throw all five of us together and all of a sudden now we've got to come up with a consensus -- or at least three of us do -- and I appreciate that and I really enjoy working with you.

But I want to remind our commissioners that we really don't want to rush to judgment as we go forward with these stimulus packages and the things that we really need to do, and I'll leave you with this thought and I've got a gift for each one of you. What I'm going to give them this morning is a turtle, and the reason why I'm giving a turtle is nothing teaches you patience better than teaching your pet turtle to fetch.

MR. MEADOWS: Do you think this is going to help the cause of Lubbock? It's going to take a little more.

(General laughter.)

MR. UNDERWOOD: My wife said I needed one also because I'm a little bit impatient also. Thank you, Madame Chair.

MR. HOUGHTON: How come you got a different color?

MR. UNDERWOOD: That's just the way it goes.

MR. MEADOWS: Can we throw these like shoes?

(General laughter.)

MR. HOLMES: I love following Fred. Well, I'm grateful, Fred, I'll keep this close to my heart.

I think the point is well taken that we need to be thoughtful about how we deal with whatever the stimulus package ultimately offers. Having said that, it is likely that we're going to be under extreme time pressure to come up with projects that can be underway in time to comply with the federal stimulus package, and so my sense is that the staff and the commission will need to address that fairly expeditiously so that we can, in fact, comply.

I'd like to join Bill in welcoming all our friends from Fort Worth and the rest from around the state. We look forward to taking up an agenda item that is near and dear to your heart. Thank you.

MR. HOUGHTON: I echo my fellow commissioners' remarks -- or at least some of them -- and I have five children and raising those five children, I think each one had their own security blanket or some form of security. This could be my next kind of security blanket, a substitute. Fred, thank you very, very much.

And as to the stimulus package, we're going to have to be very mindful. It was sold at one time to be tantamount to the next interstate highway formation or bill, and now we're getting down to it's a lot of -- there's money there but we forget about whose money it is, it's our money and we're paying for it, and I hope we're good stewards to the state when these projects are selected.

And I want to recognize my state representative from El Paso, Joe Pickett. Welcome, Joe.

And Meadows, you got something going on here today that all these people come down from the Metroplex area?

MR. MEADOWS: Just interested.

MR. HOUGHTON: Just interested people. Thank you, and welcome.

MS. DELISI: Good morning, everyone. You beat me to it, Commissioner Houghton. Everyone was focused on what's going on on the federal side. I want to say that we're about 15 days, maybe, into the legislative session. I think things are going fairly well so far -- so far, so good. And I know I'm very much looking forward to having the transportation debates in the legislature and moving forward as we debate the Appropriations Bill and the Sunset Bill for TxDOT.

So I know we have a lot of work today, so Amadeo -- well, before I turn it over to Amadeo, I just want to remind everyone that if you wish to address the commission during today's meeting we ask that you complete a speaker's card at the registration table in the lobby. To comment on an agenda item, we ask you to fill out a yellow card and identify the agenda item, please. If it's not an agenda item, we'll take your comments at the open comment period at the end of the meeting, and for those comments, please fill out a blue card. Regardless of the color card, we ask each speaker to limit your comments to three minutes.

Our first item of business today is item 1 on the agenda, approval of the minutes for the December 17 and 18 meetings of the commission. Members, the minutes have been provided in your briefing materials. Is there a motion to approve?

MR. UNDERWOOD: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

With that, Amadeo, I will turn the agenda over to you.

MR. SAENZ: Thank you, Madame Chair.

I'd like to ask Zane Webb, our director of our Maintenance Division, to please come up to the podium. Zane is our director of our Maintenance Division for two more days; he will be retiring at the end of this month, and I would like to read a resolution and thank Zane for his countless dedication and work that he's done throughout the years, but more specifically in his last assignment as division director for the Maintenance Division. And you know, he wanted to go out with a bang this past year so he ordered five hurricanes, and really he wanted to challenge our people because he's been training them, and our people did such a great job so I guess you have trained them. Hopefully you take all the hurricanes with you.

So I'm going to read the resolution and then we'll present it to Zane and take some pictures and give you a chance to give us a few words.

"Whereas, the Texas Transportation Commission takes great pride in recognizing Zane L. Webb, Professional Engineer, who has served the Department of Transportation for more than 26 years, most recently as the Maintenance Division director;

"And whereas, after serving in the U.S. Army from 1971 to 1976, Zane earned a bachelor of science degree in civil engineering from the University of Texas at Austin;

"And whereas, in 1982, Zane joined the Tyler District and worked as a designer, engineer assistant, project engineer in the Athens area office;

"And whereas, he became a licensed professional engineer in 1987 and was named Jacksonville area engineer in January 1, 1988;

"And whereas, Zane moved to Waco in 1994 where he managed the eight-county district maintenance operation for three years;

"And whereas, in May 1998 Zane became director of the Maintenance Division where he has been responsible for all TxDOT maintenance activities, including oversight of maintenance operations, emergency management, field engineering, vegetation management, marine operations and architectural services;

"And whereas, Zane served as past chairman of the Northeast Texas Region Maintenance and Operations Team and was a member and past chairman of the WASHTO subcommittee on maintenance and was a member of the AASHTO subcommittee on maintenance also;

"Now, therefore, be it resolved that the Texas Transportation Commission does hereby extend the sincerest best wishes to Zane L. Webb in recognition for his professional achievements in a career of loyal service on behalf of the State of Texas and its citizens.

"Presented this day, the 29th day of January 2009."

And Zane, we'd like to present you this resolution. Let me let the commission see if they want to say something and then we'll give you a chance to say a few words.

MS. DELISI: Well, I just want to say thank you for your years of service and your dedication to this agency. You've had a tough job over the years, particularly in the last year with all of our hurricanes, and the theme I heard over and over again in this agency's response to the hurricanes is how responsive and how hard your team worked, and I appreciate that and I know Texans affected by the hurricanes appreciate that. So thank you and good luck to you.

Commissioners?

MR. UNDERWOOD: Zane, thank you, because the men and women that you work with, they're the real face of TxDOT, and we thank you for the good job you've done and what you do, and good luck to you in your afterlife, or whatnot, as you enjoy what you well deserve. Thank you, sir.

MR. HOLMES: Zane, I live in one of those hurricane areas and so I got to witness firsthand response from your team, and it made me proud. I appreciate all that you've done and your team has done. And as the chair said, the last couple of years have been pretty tough. Now we're getting ready to have maybe some more money for maintenance and you're leaving. You may want to stick around another year or so, you know. But we appreciate all you've done for TxDOT and the citizens of Texas. Thank you.

MR. HOUGHTON: Zane, I think it's you that generally on a Friday during football season wears that orange paraphernalia around here. I don't think I'm going to miss that one.

MR. SAENZ: One of a few; there will be some more.

MR. HOUGHTON: There will be some more? But congratulations to you. My question is are you going to the dark side?

MR. WEBB: Yes, sir.

(General laughter.)

MR. HOUGHTON: My congratulations to you, Zane. I think he's got one of the greatest names in the world, first name. Congratulations.

MR. WEBB: Thank you.

MR. SAENZ: Zane and commissioners, just a little bit, Zane is truly part of the TxDOT family. Of course, Zane's dad was an employee of the Texas Highway Department, and of course then his father-in-law was an employee of the U.S. DOT, but then, of course, Zane has been working for the department. We also have Zane's daughter and Zane's son that are employees of the Texas Department of Transportation, also graduates of the University of Texas at Austin, Commissioner Houghton. And then Zane was telling me that he probably foresees that one of his grandchildren will become the next generation of Webbs that would be working for the Texas Department of Transportation.

Zane, on behalf of the administration, I want to thank you for your dedicated service and your friendship, and we look forward to working with you as you continue on the dark side because I know that you will be working on something that continues to help the betterment of our transportation system. Thank you for your dedication.

MR. WEBB: Thank you.

MR. SAENZ: Say a few words and then we'll present you that and take some pictures.

MR. WEBB: For the record, I'm Zane Webb, director of the Maintenance Division -- last time I'll probably say that to you but I won't be a stranger, I'll be back. As Mr. Saenz said, my family probably bought into this agency in '54 when my dad got out of Korea and joined it. We've pretty much been here ever since.

I would like to say that commissioners past and present, administrations past and present, have been very supportive of maintenance operations in this state, and I think that is a credit to them and their knowledge and their foresight.

I'd like to thank all the employees out in the field that have done such a wonderful job over the span of the career I've had with them and I've enjoyed with them. Thank you.

(Applause and pause for presentation and photos.)

MR. SAENZ: Commission, continuing, agenda item 2(b), Doris Howdeshell will come up and present people from Keep Texas Beautiful that will provide us some information on their accomplishments in litter prevention. Doris.

MS. HOWDESHELL: Good morning. For the record, my name is Doris Howdeshell and I'm the director of the Travel Information Division here at TxDOT. Good morning, Madame Chair and commissioners. I'm delighted to be here.

We're going to have a presentation by Cathie Gail, who is executive director of Keep Texas Beautiful, but before she starts that presentation, there's a couple of other KTB representatives here that I would like to introduce. Ms. Terri Cardwell is from Lake Jackson and she is the current president of Keep Texas Beautiful. We also have Mr. John Howard who is the current vice president of Keep Texas Beautiful. He's with a company called Claritin [phonetic] Strategies here in Austin and he was formerly with Vinson & Elkins. And we have a KTB staff member, Anne Cunic, who is going to run the PowerPoint presentation for Cathie.

With that, I'll turn it over to her. Thank you.

MS. GAIL: Thank you, Doris. For the record, I'm Cathie Gail, executive director of Keep Texas Beautiful. Good morning. It's a real honor to speak with you today.

Keep Texas Beautiful is a non-profit organization whose mission is to educate and engage Texans to take responsibility for improving their community environment. We recently updated our website with the goal of becoming the main resource for Texas in our focus areas of litter prevention, waste reduction and beautification. Our organization has had a long and distinguished history with TxDOT. The two groups first began working together in the '60s when they were known as the State Department of Highways and Public Transportation and Beautify Texas Council. The names have changed but the common goals of making Texas highways attractive and safe for motorists and encouraging tourism throughout the state have remained the same for more than 40 years.

Keep Texas Beautiful has partnered through an annual contract with TxDOT since 1985 to support anti-litter and beautification programs such as Don't Mess With Texas and the Governor's Community Achievement Awards. Our partnership began with a minute order from 1985 which declared that due to the growth of Texas, litter was increasing and that TxDOT was prepared to take the actions listed in the minute order to help reduce the litter and costs of cleanup. KTB is listed in the fourth bullet as the organization that will administer the new awards program which provided winners $700,000 in landscape installments along state highways. This program is now at a million dollars and is called the Governor's Community Achievement Awards. The landscape installment funds are awarded to communities who develop anti-litter programs, cleanup campaigns and better enforcement of litter laws.

The last bullet speaks to the relationship with KTB specifically, and the listings 1 through 9 describe the type of support that KTB is to provide through the contractual arrangement. The contract provided $300,000 annually in 1985 and was increased to $400,000 in 2000. This presentation will describe many of the programs that have developed for residents of Texas through the contractual partnership of TxDOT and KTB.

Keep America Beautiful's Great American Cleanup is the nation's largest community improvement program and it is held annually from March 1 to May 31. The Don't Mess With Texas Trash-Off started as part of this event in 1986 as a call to action to not litter on that day. The next year the roadside cleanup began and is now the largest one-day cleanup in the state. During the Trash-Off on April 5, 2008, 5 million pounds of trash were cleared by 61,000 volunteers along 4,500 miles of highway. Besides cleaning up litter, 2008 activities that took place during the Great American Cleanup included planting 7,800 trees, 500 flowers, and the creation of 207 gardens and green spaces, all of which improve the air quality of Texas.

However, our programs are not limited to this time frame. The minute order also stipulated that we would grow the number of KTB affiliate communities. That number has increased from 48 to 366 through the support of our partnership. The affiliate program is designed to mobilize grassroots volunteers in Texas communities and represents more than 17 million Texans. These communities create a network through which we provide year round litter prevention, waste reduction and beautification programs. While litter has dropped 33 percent since 2001, one in two Texans still litters, so we have a lot more to do. Trainings are offered throughout the state on a variety of topics, some of which you see listed here, and are free to all KTB affiliate members.

In 2007, Keep America Beautiful commissioned R.W. Beck to conduct a literature review of litter-related materials. It was determined that affiliate versus non-affiliate communities noted a significant reduction of litter after implementation of KAB's litter prevention and education programs, up to 32 percent in the first year and up to 80 percent after five years. The study also concluded that there are economic benefits such as the ability to attract new business and increase revenue from tourism and conventions, thus improving economic opportunity.

As we all know, the population of Texas continued to grow, as predicted in the minute order of 1985, from 16 million to almost 24 million in 2007. According to the State Data Center, it will exceed 35 million in 2040. As a result of the contractual partnership with KTB and TxDOT, our affiliate network has grown tremendously as well. In '85 we had 48 affiliate communities, in '08 we reached 366 and we have aggressive goals for the next three years. Dramatic increases have been made in the number of affiliate communities added because of the funding from TxDOT. It has increased only once since '85, from $300,000 to $400,000, and has remained the same since 2000.

KTB has two award programs: the KTB Awards Program for Individuals, Government, Business and Civic Organizations, Media and Youth, and the prestigious Governor's Community Achievement Awards. The first GCAA was presented in 1970 and TxDOT joined in providing landscape grants in 1985. Award applicants are divided into nine population categories for determining the annual winners. The grants awarded each year total $1 million in landscape grants with a grand total of $19,400,000 since 1986. On the last page of the newsletter in your packet, you'll see a listing of the 2008 winners.

Communities work year round on litter prevention and cleanup programs in the hopes of winning this prestigious landscape award. The prizes are presented to winners by the Travel Information Division of TxDOT at the KTB Annual Conference. It's not unusual to see dozens of community leaders on the stage to receive the recognition. TxDOT staff from the districts design and work with the communities to implement the completion of the project.

KTB affiliates eagerly embrace the opportunity to share litter prevention programs through the Litter Force with their affiliate communities. The website and entertaining performances at local schools deliver a strong message to even younger Texans in its litter prevention campaign and the new Litter Force Team teaches elementary-age children about the perils of littering and how they can help blast the trash and protect roadways from litter. Additionally, Keep America Beautiful's Waste In Place Program is also offered in elementary schools.

And an exciting new program being offered to combat the most common source of litter is the Cigarette Litter Prevention Program. This program raises the awareness of the huge cost associated with cleanup and the detrimental effect on the environment. Communities that have utilized the program have seen significant reductions in cigarette litter along the roadsides and streets.

During 2008, Keep Texas Beautiful promoted the message of Don't Mess With Texas through presentations, trainings, and by distributing information at statewide conferences. Additionally, we communicate monthly through our affiliate network by providing information and funding opportunities. The next slide shows some of the partnerships that we have with Keep Texas Beautiful that have joined to promote the Don't Mess With Texas Campaign. And through our new license plate, what better way to remind motorists not to litter than through the Don't Mess With Texas license plates. There have been 9,823 issued or renewed since 1998. This is a daily reminder of our mission on the roads across Texas.

I'd now like to ask Terri Cardwell to come up to present TxDOT with several awards. Thank you.

MS. CARDWELL: Good morning. My name is Terri Cardwell, I'm from Lake Jackson, and I'm the president of Keep Texas Beautiful this year.

This morning we would like to present TxDOT with some awards that were recognized on December 5 in Washington, D.C. by Keep America Beautiful. The first award recognizes the partnership efforts with Keep Texas Beautiful and the standing programs such as Don't Mess With Texas and the Governor's Community Achievement Awards. The second award recognizes the state departments of transportation for their support of Keep America Beautiful state affiliates through joint partnership projects and exceptional programming. Additionally, TxDOT's new Don't Mess With Texas Campaign won the second place award for statewide advertising campaign. This recognized its outstanding public service announcement that advances the local and national goals of Keep America Beautiful and Keep Texas Beautiful.

On behalf of the board of directors, the staff and thousands of volunteers across the state and Keep Texas Beautiful, we would like to present you with these awards and thank you for supporting us and keeping Texas beautiful.

MS. HOWDESHELL: I think each one of the commissioners should come down too because they have strong affiliate programs in their cities.

(Applause and pause for presentation of awards and photos.)

MR. HOUGHTON: Madame Chair, Coby wanted me to make sure that Commissioner Underwood, this is not about Fred being beautiful, this is about keeping Lubbock beautiful.

(General laughter.)

MR. SAENZ: Thank you, Cathie and Keep Texas Beautiful for the awards. We look to continue to work with you all in the future.

MS. GAIL: Thank you very much.

MR. SAENZ: Commissioners, moving on, agenda item number 3 deals with two reports. The first report will be presented by Steve Simmons on providing us the status on the implementation of the Sunset Commission staff recommendations. Steve.

MR. SIMMONS: Thank you, Mr. Saenz, Chair Delisi and commissioners. And, Commissioner Houghton, for the record, University of Texas El Paso did beat Houston last night in basketball. But that means you've won one of the last three games.

Good morning, commissioners. For the record, I am Steve Simmons, deputy executive director of the Texas Department of Transportation, and I'm here today to update you on the latest actions by the Sunset Commission as well as the department's implementation of the Sunset staff's recommendation for the department.

As you know, the Sunset Commission met on January 14 to discuss outstanding issues related to TxDOT. One of those issues was Representative Linda Harper-Brown indicated that she will file separate legislation separating the Texas Turnpike Authority Division from TxDOT to create a state toll entity, and thus, has removed the issue from further consideration by Sunset. Representative Isett also indicated that he will file separate legislation creating a separate office for public-private partnerships for all agencies to utilize for private investment opportunities. He also has removed that item from further consideration by Sunset.

Sunset did adopt recommendations relating to the Green Ribbon Program. This program has been a state requirement through the General Appropriations Act since 2001, and the adoption of this recommendation would put those program requirements in statute. We are currently complying with the appropriation language as it has been appearing in the General Appropriations Act; I do not foresee any complications with continuing to comply with the adopted recommendations. Legislative counsel is currently working on the draft for the Sunset Bill but we do not know at this time when it will be filed or who the author will be.

At this time I'd like to spend a minute updating you on the status of our implementing of individual Sunset suggestions. In relation to the adoption of the recommendations to complete a feasibility study related to the market value of the South Orient Railroad, staff met earlier this week with outside counsel preparing the report. We received a draft copy which is currently under review and we fully intend to meet Sunset's February 28 deadline to provide the report to the legislature.

Item 3.2 deals with our complaint process requiring TxDOT to develop standard procedures for documenting complaints and tracking and analyzing complaint data. Our electronic document management system -- which is already in place -- will be used to enter complaint data beginning in February. Reporting processes are expected to be in place by April 1. And once this has been accomplished, TxDOT will be able to establish the benchmarks and begin analyzing the complaint trends.

Item 3.3 instructing TxDOT to provide a formal process for staff with similar responsibilities to share best practice information has been implemented through all statewide and regional meetings and through an internal intranet chat room site. Early results are promising and senior management did discuss this and how to make the chat room more effective at our January district engineer, division director and office director meeting. Technically, this goal has been completed but efforts and ideas to make the site more usable are ongoing.

Item 6.1 suggests that TxDOT should centralize the outdoor advertising regulatory program requiring staff to report to the Right of Way Division instead of district engineers. You approved the proposed rules last November and those rules were posted in the Texas Register. The posting announced a public hearing in December and a public comment period ending January 5. The public hearing was held and the public comment period ended without any public comment being received, and those rules are set for commission adoption today.

Item 6.7 requires the department to develop a complaint process for outdoor advertising issues. The complaint form is moving through a field test at this time, and once received, the form will be logged and tracked to enhance our ability to resolve billboard complaints. The public launch of this process has been moved from the end of January to February.

Most of our other Sunset items have a completion date sometime this summer or require legislative action. Those not requiring legislation will be handled administratively without any further direction from the commission, and I will plan to present an update to the commission later this summer unless new information arises that requires your attention. And I'd be happy to answer any questions.

MS. DELISI: Thank you, Steve.

MR. SIMMONS: Thank you.

MR. SAENZ: Thank you, Steve.

Commission, agenda item number 3(b) is also a report by John Barton that's going to present what the department has been working on with respect to the potential federal economic stimulus package that is being considered by Congress at this time. John.

MR. BARTON: Thank you, Mr. Saenz.

For the record, my name is John Barton and I have the pleasure of serving you as the assistant executive director for Engineering Operations, and as Mr. Saenz has pointed out, I'm here this morning to share with you some information about the economic stimulus package that Congress and President Obama are currently developing in an effort to stimulate our nation's faltering economy. A large part of that program -- which is referred to as the American Recovery and Reinvestment Program -- provides investment in our nation's infrastructure, and so today, what I would like to do is provide a brief report to you about the activities the department and our transportation planning partners have undertaken recently to implement the transportation components of this program and to develop strategies and plans for responding in a manner that provides both immediate and long term benefits to the State of Texas.

As it stands today, the House has passed their version of the bill -- they did that yesterday; the Senate marked their bill up on Thursday and I believe will be taking action sometime next week. When you look at the two versions of the bill, a brief analysis reveals that the final version may contain a couple of elements that I wanted to point out to you as well as some funding levels, but please keep in mind that these numbers will change, there's no question about that, and these are only approximations of what ultimately might be considered.

The total funding for highways and bridges, as set forth in the House version of the bill, is $30 billion nationwide, and in the Senate version it's $27 billion, approximately. Funding for transit, as you can see from this slide, is set at approximately $9 billion in the House version and about $8.4 billion in the Senate version. For aviation, as you can see, there's approximately $3 billion in the House version and $1.1 billion in the Senate version, while for rail activities that would be related to issues here in Texas, approximately $300 million is in the House bill and $250 million in the Senate's bill. The Senate version also includes an opportunity for discretionary grants issued by the Secretary of Transportation for projects that have a significant impact on the nation, a metropolitan area or a region, and that's established at approximately $5.5 billion, as it's shown on that slide.

If we focus on the allocations for highways and bridges here in Texas -- which is obviously what a lot of people have been interested in -- Texas' share would be approximately $2-1/2 billion under the House version of the bill and $2.2 billion under the Senate version, although the Senate version, as I just said, also allows for opportunities to award other projects through a discretionary program. I'm going to talk about that a little bit more later on.

But both bills do contain project delivery and implementation provisions that include use-it-or-lose-it requirements. Fifty percent of the funding would need to be obligated within 90 days under the House version of the bill, and then in the Senate that 50 percent requirement would allow up to 180 days for obligation. These provisions are perhaps the most controversial elements that are currently in the versions of the bill and ultimately the final bill, when it's enacted, if it is at these levels, will require a rapid response and action on the part of the department, our metropolitan planning organizations and the commission to make sure that we avoid losing funding under the use-it-or-lose-it provisions of the bill.

The remaining 50 percent of the funding would be required to be obligated by August of 2010 in the House version of the bill and within twelve months of enactment in the Senate version of the bill. States and metropolitan planning organizations are also directed to give priority to selecting projects that can be completely constructed within three years of the bill's enactment.

Under the House version of the bill, approximately 55 percent of the funding would be allocated to the state to be used at the commission's discretion for statewide priorities, while the remaining 45 percent of the funding, as you can see on this slide, would be distributed to the urbanized areas of the state based on a population scenario. This, in effect, provides for a sub-allocation to the metropolitan planning organizations to be used for projects at their discretion. Ten percent of this funding -- which is the 45 percent allocated based on population -- must be spent on non-traditional projects, commonly referred to as enhancement projects such as bike trails, landscape, visitor centers, those sorts of activities. And the remaining 90 percent of the 45 percent under the House version is further sub-allocated even further: 62-1/2 percent being distributed based on population and 37-1/2 percent being reallocated to the state for the commission to use.

The Senate version of the bill divides the money a little differently: 60 percent would go to the state to be used at the commission's discretion and 40 percent would be distributed based on populations of the urbanized areas of the state. There are no set-asides in the Senate version of the bill for enhancements or anything else, but there is a 5 percent requirement that appears to be in there that must be used on air quality improvement projects. And I'll provide a little more detailed description of the House version of the funding distribution in a minute, simply because we know more about it at this time.

Both bills require that the governors of each state certify that their state's economic recovery and reinvestment funds have been distributed equitably and fairly across the state under both versions of the bill again. There's no definition of what equitably and fair is at this time. And the House version also requires that priorities be given to projects that are located within economically distressed areas of the state. There is a definition for economically distressed in current existing federal statute, but due to the current state of the economy, both here in Texas as well as across the nation, this provision most likely does not exclude any area from receiving projects or funding projects from within any area of the state.

States are also required to maintain their current level of funding commitments for state resources going to transportation projects for highways, bridges and other areas, so in other words, a state can't use this stimulus funding to replace their currently planned funding activities and therefore reducing their overall program. Texas, quite frankly, is not going to have any problem with that requirement, and I wanted to make sure I pointed that out to you.

A key provision of both of the versions of the bill is that reporting is going to be a significant part of what's required to ensure accountability and transparency for the use of these funds so that the public can see where they're being spent and the benefit that they are providing. Some of the information that we may be required to report on include the projects that are funded through the program, the status of those projects as they move forward through construction, and then the number of jobs that are created or sustained by each project. This information would be reported to the U.S. Department of Transportation and then put on a website for the public's review. It is also possible that states may be required to report on their use and implementation of green technologies as part of this program.

At this time I would like to walk you through a little bit of the specifics of the potential funding for Texas that we might receive under the House version, again, simply because we know more about that, and it hopefully will give you a sense of the order of magnitude that the program would provide.

As I mentioned earlier, Texas would receive approximately $2.4 billion for highway and bridge projects through the House version of the bill, and this $2.4 billion would then be further sub-allocated at 45 percent, or a little over $1 billion, to the state's urban areas based on population, and 55 percent, or approximately $1.3 billion, being allocated to the state to be used at the commission's discretion. Ten percent, or $109 million, approximately, of that $1.1 billion allocated to the urban areas would have to be spent on enhancement projects, leaving approximately $980 million to be sub-allocated to them.

The sub-allocation, as I said, is further divided: 62-1/2 percent, or about $613 million, being distributed across the state based on population, and 37-1/2 percent, or about $368 million, being returned to the state to be used by the commission to select projects. Of the $613 million sub-allocations that are distributed based on population, they're split up into four groups: our large metropolitan areas of those areas that have over 200,000 people living in their urbanized areas, small MPOs or urbanized areas that are between 50,000 and 200,000 in population, small urban areas outside of a metropolitan boundary between 5,000 and 50,000 in population, and then rural areas less than 5,000. And you can see the breakdown of those numbers on this slide.

This results in about $358 million being distributed to our largest MPOs here in Texas and about $66-1/2 million being distributed to the 17 smaller MPOs, and then about $189 million being distributed to those areas that lie outside of MPO boundaries across the state. So using this funding split, we've calculated the information that's shown there and it's a breakdown of how the funding would be directed to each MPO and non-MPO area based on the current census data that we have available to us.

As the potential for economic recovery plans began to take shape late last year, a great deal of attention was focused on how Texas was preparing to respond to this opportunity, and as you will recall, early on our response to a national survey that AASHTO had requested indicated that we could deliver about $6 billion worth of projects within 180 days of a program call if we were asked to do so. This was, of course, in response to that survey and similar to what most states responded, our response was based heavily on the types of projects that we had in the mill and in order to deliver within the time frames that they asked for, and so there were a lot of pavement and bridge preservation and maintenance projects as well as rehabilitation projects in that list.

And as this information was shared and reviewed by people from across the state, many of our elected officials, transportation partners and entities, and quite frankly, you, as our commission, began to question or challenge us to work more cooperatively with the other partners in the industry to identify and develop ways to expand that universe of potential projects and to define ways that could create opportunities for projects that created longer lasting impacts to our state's economy that could be included in our stimulus package.

So working with our metropolitan planning organizations, our transit providers, the toll entities here in the state of Texas, as well as our elected officials, we've collaborated over the last several weeks to develop a more unified approach to identifying projects and prioritizing them for Texas, and to put it simply, we wanted to identify and prioritize projects that put Texans to work immediately and that also provide long term benefits to our communities that these projects are ultimately going to be constructed in. And I would be remiss if I didn't thank Senator Watson and the commission, especially Commissioners Houghton and Meadows, for their encouragement and participation in these discussions that helped us move forward in a direction that can give us an opportunity to take advantage of a collaborative effort to create the best of all possible plans for Texas.

So working with those groups, we've identified the universe of all eligible candidate projects that we think are out there, and we've worked with, again, our MPOs, our transit authorities, our toll entities and our federal partners as well, and of course, our local TxDOT staff to identify those projects that are ready to go now, can go under contract in the next few months, and that include long lasting benefits to our communities. And from this exercise with our transportation partners, we've identified projects valued at a little more than $5 billion in construction cost that would meet the requirements of the stimulus package as we currently understand it. Approximately $9 billion worth of these projects are for new construction or expansion type work that will be provided or that could provide significant congestion relief and expand economic opportunities within our urbanized and metropolitan areas.

The industry has collaborated to position us well to take advantage of this economic recovery and reinvestment program, and I believe to the maximum benefit of our state. We are continuing to work through this process and together we will continue to refine and define our plan and will do so until a final bill is ultimately enacted upon and the recovery plan is more fully implemented and understood. The challenge for us, quite frankly, now is going to be making decisions on how we select projects that ultimately will be funded with the resources that the stimulus package can make available to us from a very long list of possibilities.

I wanted to share with you that through the leadership of David Casteel, the 25 district engineers from around the state, led by a strike team of Randy Hopmann, Bob Ratliff, Lauren Garduno, Bryan Wood and Lonnie Gregorcyk, with the assistance of Tim Powers, have worked diligently with our local leaders and entities to develop a full list of projects for their regions of the state that meet the anticipated conditions of this economic stimulus program.

And the district engineers were also asked to take that information and identify those projects that they believe have a very high degree of certainty that could be delivered ready to go to contract between now and August of this year. And these projects, of course, are above and beyond what we currently have planned under our existing funding streams for the remainder of this fiscal year, and ready to go is defined simply as projects that have environmental clearance and are ready to move forward to construction, they have design work completed so we can take bids almost immediately, and they have enough right of way secured and in the process of being secured to allow the construction to begin without holding up the contractor.

So I'd like to just briefly touch on the amount of funding and projects that we identified from around the state. So if you'll look at the next few slides, in the East Region we've identified about $850 million worth of projects in the four districts that we call the eastern side of our state. If you look at the next slide, it's the South Region, we've identified about $1.8 billion worth of projects that would be ready to go in the six districts that we call the South Region of our state. For the North Region we've identified projects that would need about $4 billion worth of stimulus funding, they have a total value of about $8 billion, and of course, that's from all the districts in what we call the North Region of our state. And then looking at the West, we've also identified about $1.2 billion worth of projects, again, that would be ready to go between now and the end of this fiscal year from the western part of our state. So for a total of about $8 billion worth of stimulus funding needs, we would be able to deliver $12 billion of projects to the state of Texas, of course, assuming that that level of funding would be provided from some kind of funding stream out of the stimulus package, and quite frankly, that's not likely.

Through this exercise, our partners have identified a total of more than 1,500 projects that would require about, as this slide shows, $7.9 billion in economic stimulus funding, but that would allow us to bring forward about $12 billion worth of projects, and many of our MPOs currently are continuing to refine their projects list and we'll work with them and our other transportation partners to evaluate these lists, prioritize projects, and develop the program to ensure that the best possible list of projects is made available for consideration during the limited remaining time available to us as this economic stimulus package is considered at the national level.

The primary purpose of the American Recovery and Reinvestment Program is to create and sustain jobs, we all understand and know that, and some people across the nation have questioned whether or not investments in transportation infrastructure will really pay dividends in an immediate way to benefit our economy and the citizens of Texas as well as of the nation. We did a quick analysis, through our Construction and Finance divisions, to analyze the level of jobs that might be created if we put forward $2.5 billion worth of investments in Texas based on the types of projects that our MPO partners and others have helped us identify, and our analysis reveals that more than 23,000 direct jobs and more than 69,000 total jobs would be created through the peak of this program and allow us to have about $75 million worth of payouts to contractors on a monthly basis, again, during the height of this program, with the vast majority of this investment being paid out within the three years as anticipated in the bill.

So as we continue to prepare for this unique opportunity, there's a few main points I wanted to leave you with today. First, the needs for Texas that we have for investments in transportation infrastructure far outweigh the resources that we have available to us or that this program would be able to make available to us. Secondly, Texas is well prepared and will deliver a program that uses every single dollar sent to us regardless of the conditions that are going to be placed on it ultimately by Congress and the president. Third, our industry is prepared to move forward quickly and to respond to this program once it's been finalized and we know the details of the bill. And finally, TxDOT, with the assistance of our local partners, have and continue to work together in an effective manner, in my opinion, and we await direction from you, as a commission, on the path you would like to take moving forward.

This concludes my report to you this morning, and of course, I'll be happy to answer any questions that you may have.

MS. DELISI: Do you have a question?

MR. HOUGHTON: I do. On the last slide, John, Stimulus Employment, what criteria did you apply there as to the employment? Are these -- with no disrespect intended -- is this a worker on the end of a shovel filling up potholes, or what kind of projects are you talking about here?

MR. BARTON: That's a great question, Commissioner. I asked staff to analyze that if we put forward $2-1/2 billion of investment, $2 billion of that would be on major mobility reconstruction type projects and about $500 million would be on maintenance/preservation type activities, rehabilitation type projects. And they, knowing the life span of those typical projects and the type of employment demands for those types of projects, charted out how they would be constructed over the three years of the plan and how the money would flow through those contracts, and then calculated, based on that, the number of jobs that would be created based on a dollar spent per employment created.

MR. HOUGHTON: So the key to this program is sustainable projects over a period of time. Overlays are important but this is not directing all the money to overlays, filling potholes and those types of things.

MR. BARTON: That's correct, and of course, this analysis is only for the direct and indirect construction related jobs, but these jobs were about $500 million of a $2.5 billion plan would be on those maintenance/rehabilitation type projects, $2 billion was used to evaluate mobility and expansion type projects. And I think it's important to note that if leveraged opportunities existed -- in other words, if we invested $2-1/2 billion of stimulus funding but it delivered $5 billion worth of projects -- these employment numbers would obviously go up exponentially.

MR. HOLMES: John, is the assumption on the $500 million for maintenance, you assume that $188 million of that $500- comes out of that distribution to the districts?

MR. BARTON: Yes, sir, and I was just trying to come up with what I thought was a reasonable breakdown of the types of projects, knowing that if half of the projects had to be out in 90 to 100 days, what type of projects could we deliver that quickly, knowing that under the current STP breakdown -- that STP is the federal funding formula program we would have to use to divide the money -- about $188 million automatically was going to those rural type areas where maintenance type projects would be most likely selected.

MR. HOLMES: And the assumption is that, one, they would select maintenance projects, and two, that they'd be ready to go within the 90-day time frame.

MR. BARTON: Yes, sir. It's an assumption that they would pick those projects, it's not so much an assumption that they'd be ready to go in the 90-day time frame because we've already identified projects that certainly would meet those conditions.

MR. HOLMES: And if you look at the total projects on the list today, how many actually would be ready to go in 90 days -- not just maintenance but mobility as well?

MR. BARTON: I don't have the total number of projects, but in our current list of projects we have about $2.2 billion, I believe, that is available to go forward in that first 90 to 120 days.

MR. HOLMES: But right now the House rules are 50 percent in 90 days and the other 50 percent by August of '10?

MR. BARTON: That's correct.

MR. HOLMES: And August of '10, presumably that fills out the balance of that $8 billion or so?

MR. BARTON: Yes, sir, and of course, that's great news for us because given enough time between now and April of 2010 -- which would be the last date that you would be able to have projects ready to go and start taking bids on them -- we could deliver a lot of very meaningful and important projects here in the state.

MR. HOLMES: Is adding $500 million to maintenance an adequate number from staff's viewpoint?

MR. BARTON: From my perspective as your staff, I think that would be an appropriate recommendation for me to make, and it's based on this: as we moved into this year, back in the spring of 2008, you'll recall we discussed the funding for the next eleven years, and this particular fiscal year we reduced our funding for preservation and rehabilitation type projects from what we had hoped to do, about $1.3 billion, down to about $800 million. And so as a staff member, it would be very nice if we could take advantage of this opportunity to bring that number back to what we had planned on prior to these economic conditions that we currently face.

MR. HOLMES: And would you do that through just an additional allocation to the districts, or would you have that be part of the commission discretionary or department discretionary piece?

MR. BARTON: In order to, in my opinion, develop the best plan, it would be good to use it as a distribution to the districts based on that allocation formula we currently have under federal. And as you saw on the slides, $188 million will be going to the districts based on that formula of distribution anyway. If we added $250- to $300 million to that allocation and distributed it through that formula, to me, that would give the district engineers, with their local partners, the best opportunity to pick their highest priority projects based on pavement conditions and safety needs and that sort of thing.

MR. HOLMES: And that would reduce the discretionary portion from a billion seven to a billion four or so?

MR. BARTON: About a billion four, yes, sir.

MR. UNDERWOOD: Now, John, to make sure I understand this correctly, you're going to devote this money, this half a billion -- is that correct -- to maintenance?

MR. BARTON: That's the recommendation that I would like to move forward, yes, sir.

MR. UNDERWOOD: Now, that will be allocated evenly as the normal formula?

MR. BARTON: It would be allocated using our STP formula. It's not our normal maintenance formula, but in the federal bill that is currently out there, $188 million would be distributed through what's referred to as the STP, Surface Transportation Program formula, and that's based on population outside of urbanized areas rather than on pavement conditions.

MR. UNDERWOOD: But remember when we took money out of maintenance earlier, we actually penalized certain districts because they had a much higher score. What's going to happen there?

MR. BARTON: Well, as you just said, no good deed goes unpunished, but quite frankly, if it would be the commission's desire, and from a pavement preservation perspective, perhaps it would be the best thing to do, anything in addition to that $188 million that's in the bill to be distributed by the STP formula, if the commission chose to add an additional $250- or $300 million -- as I am recommending -- we could use our preservation program formula to distribute that piece of the funding, and that would be not punishing those that have performed well but it would be based on our current formulas on pavement conditions and number of miles that have to be maintained.

MR. UNDERWOOD: Now, when we do this maintenance, are we also talking about the safety aspect of it, of widening them, making sure that they're now 24 feet wide instead of 18 or 20 or whatnot, and putting shoulders on? Is that part of this?

MR. BARTON: Commissioner, it is. In the normal course of work as we do our maintenance work, oftentimes if there are safety issues, we'll address those with those projects, and as you heard yesterday, Carlos Lopez, of our Traffic Operations Division, reported to you that we're also currently evaluating projects to select about $450 million worth of safety bond programs as well. So we would be able to address a lot of safety needs with projects going to contract over the next year and a half if we take this stance on the economic stimulus package and have that safety bond program on top of it.

MR. UNDERWOOD: Well, you understand where I'm coming from, John, because I want to make sure that we take care of the rural areas and make their roads safer and whatnot, if this package is out there.

MR. BARTON: Yes, sir, and I think that that funding to those areas, if the commission chose to do that, would provide them many opportunities to do that -- to not only maintain their system but address immediate safety needs as well.

MR. UNDERWOOD: But when we do this, we're going to give this money to them at their discretion, we're not going to tell them how to do this. Isn't that correct?

MR. BARTON: Well, it's the commission's discretion to do that, but to us, it would be that they need to spend it on preservation and safety projects, not on mobility projects. And quite frankly, there aren't many mobility projects in the rural areas.

MR. UNDERWOOD: Exactly, so that will kind of solve itself.

MR. BARTON: Yes, sir.

MR. UNDERWOOD: Thank you.

MR. HOLMES: John, in looking at the way the bill distributes the stimulus money, and if we moved $250- to $300 million from the discretionary portion to the districts, the $500- would really be the minimum, wouldn't it, that would be going to maintenance? Because if I look at this, you've got $188- by district, you add another $300- out of the flexible part, and then you've got another $83- in the urban MPOs. Presumably some of that's going to be spent on maintenance. Is that right or not?

MR. BARTON: I think that it could be, Commissioner. The $83 million or so that's available to the small MPOs, I think a lot of the projects that those MPOs would prioritize would be reconstruction and rehabilitation type projects, so it would address some maintenance. I don't know that they would be doing a lot of added capacity for two reasons: their demands for that may not be there and the cost of those mobility or added capacity type projects may be much, much more than their limited share of this funding formula would be.

MR. HOLMES: And you have a couple of other steps where there is the rural population outside of urban areas less than 5,000 is another $105-, that's on top of the $188-?

MR. BARTON: No. That is a component of the $188-.

MR. HOLMES: That's a component of the $188-.

MR. BARTON: Yes, sir.

MR. HOLMES: Okay. And what I was trying to kind of work up to was that if we put another $300- with the $188-, there is going to be other money spent on maintenance out of these other allocations and I'm trying to get a handle on what that might be.

MR. BARTON: In the small urban areas, the amount of their allocation that would go to maintenance or rehabilitation type efforts probably is higher in magnitude, probably as much as 40 percent of that. In the large metro areas, I would think it would be the reverse, very little would go to maintenance, it would probably mostly be spent on new construction, added capacity, congestion relief.

MR. HOLMES: It would be interesting for me for you to come up with an estimate of how much over that $500 million would be spent on maintenance out of the other allocations.

MR. BARTON: We can work on that in partnership with our MPOs to kind of get a feel for the types of projects they are anticipating selecting with their piece of this. We'll be happy to do that for you.

MR. HOLMES: Thank you.

MR. MEADOWS: I'd just like to take a moment to recount a bit of history first, and perhaps pay a compliment or two, and then really talk about sort of where, at least from my perspective, the direction I think we ought to at least consider going.

The first thing we've got to remember, that going back but a few months and great enthusiasm overwhelmed us all -- and I'm talking about every community in this state, every county, every city, every MPO, everyone was scrambling to put together their stimulus package list -- and I would compliment this staff to have taken the opportunity to recognize that in that confusion was most likely not going to yield success for us, and to have gone about in a very coordinated and thoughtful fashion, working with the MPOs in this state and the toll authorities in this state and coordinated a single list of projects. I mean, I think that really is a testament to our thoughtfulness in proceeding and I think it has served this state well.

Because, in fact, what we have today, as we sit here, when you start talking about $1.4 billion or whatever the discretionary funds are -- because that's going to be the challenge; we can talk about maintenance but let's talk about the real challenge on the table -- to me the real challenge is how are you going to allocate $1.4 billion or $1.6- or $1.7-, and to me, we have an opportunity here because we have begun a process that was coordinated and thoughtful because we've worked with our MPOs. Because we've respected their wishes and incorporated their projects into our master list, we have those projects, we have the most critical projects in this state that are high impact projects that really will result and reflect what I believe the national public policy goals are that were contained in the package.

So the challenge back to staff, I think, at this point is to begin to think about what the methodology is by which you might recommend a process -- a process that would enable us to fairly and rightly, equitably distribute the funds. You know, what I really think is you start with what the goals are, and I think those goals are fairly easy, I think they've been articulated for us, and you begin with shovel-ready job creation. But more importantly, I really do believe, or as importantly -- I guess I should say -- is that we know many of these projects have the real potential to have long term major economic development impact. That is the potential and that really is the issue. As we begin to think about criteria by which we apply and determine how best to allocate these monies, that should be a factor in addition to this shovel-ready sort of criteria.

In addition to that, you mentioned the leverage opportunity. Think how many projects in this state that really are very close, they probably are, quote, shovel-ready, that a $100 million investment may well yield and enable a billion dollar project to take place immediately. I can think of a couple -- I can think of one, perhaps, in Bexar County. Let's think about that. If I'm trying to think about what criteria to apply, those are the sorts of criteria that you would want to put in the matrix and use as the selection criteria.

I think the challenge we have today is to go back, after having a thoughtful process that has resulted in having a list coordinated with the MPOs, apply a secondary process that enables us to make good decisions, and that should be a very transparent process. I think everybody would expect that, everybody that has participated with us in good faith today would expect that to happen, and that would be my request to staff.

And I guess I forgot about the compliments. Thanks to you guys, and I will tell you, our GPA staff did a wonderful job in communication, of preparing information and representing us well in Washington. All of the commissioners were involved. I'd have to pay a particular compliment to Commissioner Houghton because I watched him trudge through a couple of very cold and dreary Washington days, communicating the case for Texas to Chairman Oberstar and a number of other members of Congress, most of our Texas delegation, I should say. And I'm paying him this compliment because, in fact, I told him I was going to give him a ride home from a dinner last night and I totally forgot, making him walk -- he said it was forty blocks, but I think it was only nine. Anyway, thank you.

(General laughter.)

MS. DELISI: I just have one question, and this may be more appropriate for Coby to answer, but do you know what the status of the possibility of eliminating this year's rescission?

MR. BARTON: That is a question that's more appropriate for Coby to answer, and I'll ask him to come up here. Mr. Chase.

MR. CHASE: For the record, my name is Coby Chase, director of the Government and Public Affairs Division. Senator Kip Bond of Missouri will offer an amendment when it's on the Senate floor next week to eliminate the last rescission in SAFETEA-LU, and we've advised our senators that we believe that would be an excellent idea.

MR. HOUGHTON: Well, look at the math, Coby. We get, let's say easy math, $2.6 billion and what's the rescission?

MR. CHASE: The rescission wouldn't put a hard dollar amount on top of that, that would be $700-plus, $729-, if I remember correctly, and there are two parts to this here: one is that's $729 million of projects you do not have to tell the stat's MPOs to take off the future books; the other part of this -- and we'll see it when it happens -- remember the last rescission, why it got a little more dramatic than simply a planning exercise, it started to take real cash, took a little bit -- and James Bass has the number -- but I believe it was like $30 million of real money. The question is that last rescission, what does it really do: is it just planning dollars you'll be telling the MPOs to take off the books and TxDOT, or is it planning dollars and some hard cash, or is it whatever the case may be?

MR. HOUGHTON: Do we know that yet?

MR. CHASE: We do not know that yet.

MR. HOUGHTON: So we take $700- minus $2.6-, we've got $1.9- if that's the potential net gain.

MR. CHASE: And Senator Bond has been around the highway program for many years and he's intent on getting that passed. I don't know what the odds are; my guess is there's a good chance that he'll be successful and it will be --

MS. DELISI: I couldn't hear what you said.

MR. CHASE: I apologize. I don't know exactly what the odds are but my guess would be he will be successful and it will be an item in conference.

MS. DELISI: What was the reception in the House to that idea?

MR. CHASE: The Texas delegation was very supportive of it, people who are actually writing the bill, it was never considered publicly.

MR. HOUGHTON: This is far from recreating the interstate highway system.

MR. CHASE: Yes, agreed.

MR. HOUGHTON: As purported.

Michael, did you want to talk?

MS. DELISI: I do have one person who signed up so we'll bring him up. I'd like to call John Shackett up at this time.

MR. BARTON: While Mr. Shackett is coming up, I just want to say I think we've got clear direction from the commission on what you'd like to do. I'll get this information you've asked for, Commissioner Meadows, and we'll start developing a plan.

MR. HOUGHTON: And the congestion relief issues, there should be our five stated goals, does it meet.

MR. HOLMES: That's what I was going to say, I'd absolutely put congestion into that matrix.

MR. BARTON: Well, we'll start working with our transportation partners, MPOs, and put together a plan on how to select or prioritize projects and get that to the commission soon.

MR. SHACKETT: Good morning, commissioners and Mr. Saenz. My name is John Shackett and I'm a strong supporter of TxDOT and mobility agencies. $30 billion out of $850 billion, that's a little concerning about that, but it is great to see a little economic stimulus coming our way. However, due to all the competing interests at the federal level, we cannot rely on the federal government to address our infrastructure needs.

A couple of items to consider at the state level: we need to provide assurance across the street that every dollar invested in TxDOT will be allocated evenly to all the five goals; two, we need enabling legislation on Prop 12 that restricts those funds to invested or leveraged on projects that generate revenue that can pay back the debt service so we do not have to rely on general revenue to fund that; and also to quick jacking around with the gas tax and pass a minimum of 10 to 20 cents increase.

The legislators need to inform their constituents that this will create significant jobs, can be used to fund Prop 12 debt service and 100 percent will stay in Texas. I know this is only an interim solution but I guarantee you that the public is numb to the volatility in gas prices and will forget this passed within two weeks.

In addition to that, we need to immediately start educating the public on the benefits of VMT, and I know there's a lot of studying that's going to go on with that, but we need to start educating the public right now so they can be prepared as we move forward.

I've come to the conclusion that operating government is very similar to operating a business: you have sources of revenue and you have expenses. We also have a board of directors which is the commission, management and staff which is the agency, and we have shareholders which is the public represented by the folks across the street. The question is how do we achieve alignment between the board, shareholders and management. I believe you accomplish alignment by identifying common goals, and we've actually done that. Everyone agrees we should reduce congestion, enhance safety, expand economic opportunity, improve air quality, and preserve our assets.

Each one of these goals represent different sectors of the public, and any one of these goals could consume the entire budget. For example, there's no doubt that maintenance can absorb the entire budget and is very important to preserving our assets, however, preserving our assets is just one of the five goals of this agency and the shareholders get pretty nervous about investing the majority of our dollars into one category because it is neglecting the other 80 percent of our goals. One thought to how we can accomplish alignment is to commit 20 percent of every dollar that comes into this agency to each one of the goals. This would provide confidence to all interested parties that the limited funding is being allocated to accomplish all of our common goals.

Thank you for your time.

MS. DELISI: Thank you.

I'd like to call up Michael Morris, please.

MR. MORRIS: Madame Chair, Michael Morris, director of Transportation of the MPO in Dallas-Fort Worth. Very nice to see you all again. I just want to follow up on some positive comments that Commissioner Meadows made and leave this thought with you.

First of all, not all parts of the state can do the same thing, so you don't want a one-size-fits-all, but I think you do have parts of the state that have a tremendous opportunity to leverage transportation projects. Thus far, you're counting the job creation of putting the workers to work in the multiplier of what those workers do. But you also have the advantage of creating a partnership to go build more projects. As Mr. Meadows said, you put $100 million or $200 million in, you may be able to build an $800 million job as you partner -- let's use the term partner -- and build more.

And if you go back to John's graph, you saw some of the districts have these multipliers in part of their particular situations. And Mr. Underwood, I'm not saying this is good for the rural areas, necessarily, but I think what we do is create a team, what urban regions can do can create a better Texas and you don't have to do the same thing in each part of the state.

In addition to creating a partnership, you then have a second benefit of financially leveraging the projects, because if you put it on some project where you partner, it then creates a revenue stream independent of your ability to do the project to begin with. So you can do stand-alone projects or you can do projects with partners that give you a bigger bite, or you can do the types of projects with partners that actually create a revenue stream so that employment graph doesn't stop after four years, it actually continues over time, and I think, Mr. Meadows, that is what you're talking about.

So I encourage us to think about that. Now, I know it's somewhat dangerous to do it in a short amount of time, but I want to credit TxDOT, John Barton and the team approach. We have been on phone calls every week, we have been working every single day, including the weekends, for the last three weeks to prepare this state for this particular initiative, and I know other parts of the state have been doing the same things, and every week we send a new list in to John that tightens up, tightens up. We're not waiting for Congress to act, we're getting our projects ready and parallel throughout the whole state, waiting for that to go so we don't hurt our ability of keeping our employees either from losing a job or getting these people back to work as soon as possible. So I would encourage this notion of partnership and leverage as part of the particular formula.

The second thing -- and I know this is dangerous -- is when you have sub-allocations and sub-allocations of sub-allocations and sub-allocations with set-asides, you end up doing a whole bunch of projects that are all little. I think, hopefully, we've matured our relationship to the point that we can do very few projects that are real big -- that's the hope in Dallas-Fort Worth. So I've talked to my elected officials who are here, instead of giving us a sub-allocation and then you work on your projects, we're willing to put our money on the table with your money on the table and see if we can do a few really big projects within a particular region instead of sub-allocating to us.

Now, I'm not sure all the MPOs would necessarily agree to that, but if you're in Dallas-Fort Worth and you're thinking about using some of your money in Dallas-Fort Worth, instead of sub-allocating money to us, can we put all of our money on the table at the same time to do a few of these regional projects that are partnership-driven and have this leverage opportunity.

Mr. Holmes, the one thing I just wanted to add is sometimes the best way to improve the maintenance of our facility is to totally rebuild it in a new project. Later on on the agenda, one of the worst pavements in the Dallas-Fort Worth region is on 820. Now, we can do preventative maintenance on 820 forever under the maintenance column, or we can totally rebuild that particular facility and get that pavement up to date. So sometimes when you see maintenance money and capacity money, as policy officials, your first priority is safety and to maintain the infrastructure of the state. As you debate how much money should go into maintenance and how much money should go into new capacity, look at the new capacity projects that we're doing and look at their current pavement and you'll see that we're moving ahead on a capacity agenda that's also rehabilitating what is a pavement that's 40 or 50 or 60 years old, and your staff needs to balance and say this particular project is capacity, but you really need to think of this as a maintenance project because it's 65 years old.

Thank you for the time, Madame Chair.

MR. HOUGHTON: I'd like to ask John a question. Stay close, Michael, on the front row -- not the front row, that was the second row.

Knowing that the fuse is very short, are all of the projects that we have seen that meet our five goals, are they in the MPOs STIPs?

MR. BARTON: There are a few that are not. We've been having weekly conference calls and inviting all of our MPO partners, transit authorities and others, as we've been discussing that they need to identify those that aren't in there that are probably going to be a higher priority. We need to get those in the plan and our federal partners and our MPO partners and our TxDOT local partners are working to get those plans out there for public involvement because that's at the local level a 30-day time period and then after that a 45-day time period at the federal level, and we can't do them concurrently, they have to be nose to tail, unfortunately.

MR. HOUGHTON: So you take 30, 45, 75, you've just chewed up out of the 90.

MR. BARTON: Out of the possible 90 days, and that's why they've actually started their 30-day clocks already in most cases to add any of those projects that weren't quite in there. We've also at the state level started to give us, for the maintenance type projects, bridge replacements, maintenance, preservation and rehabilitation. We already started our public involvement and presume that we would be doing up to $800 million worth of those types of projects, knowing that we probably won't but we wanted to identify more and cut it back rather than end up having more then $800 million and have to go through another public involvement process.

MR. HOUGHTON: Do we and our partners at Federal Highway have the ability to react that quickly and absorb the volume that is getting ready to hit, the tsunami?

MR. BARTON: That is an outstanding question. One of our biggest concerns early on was having this huge wave of projects that would require additional environmental reviews and approvals. Our MPOs have worked hard to identify those projects that are already environmentally cleared or very close to it, as well as our own staff. And so the overwhelming majority of our projects are already past that stage, and our Environmental Affairs Division, as well as our FHWA partners, are looking at this full universe of projects, if you will, project by project and checking off now are they environmentally clear or not, so that when we do come forward with project selections, we know and have a great deal of confidence that if we ask you to approve them, if the MPOs approve them at the local level, that they will be successful.

MR. HOUGHTON: Coby, question. In your crystal ball, when do you believe that there will be a bill on the president's desk, if you had to guess?

MR. CHASE: Oh, if I had to guess -- and inserting some plucky optimism here -- by Valentine's Day. The Senate intends to have it on the floor next week, but now that I think about it, the earliest would be Valentine's Day -- end of February is actually the betting line now that I'm recovering in memory.

MR. HOUGHTON: And the clock runs, so he signs Valentine's Day.

MR. CHASE: The clock starts then. But the more I think about it, it will probably be closer to the end of February is the betting line now.

MR. HOUGHTON: So the 90-day clock runs, if it's 90 days. So the worst case, the 90-day clock starts running a month from now.

MR. CHASE: Well, it doubles it which is still not that much time but it's much more thoughtful than the House version in that respect. And who knows what they'll do in Congress, it could just be split the difference and they get back to 120, it could just be as simple as that.

MR. HOUGHTON: For those MPOs and district engineers that are watching in cyberspace and through the internet, it is mindful that they need to bring all these projects forward. Michael, are your projects ready to go on your list?

MR. MORRIS: Working with John, first of all, all of our projects, we think will be environmentally cleared, and I've been on conference calls with John, again, complimenting him on his process. I've encouraged the state that if your project isn't environmentally cleared, it's not ready for this particular program. There's no way, in my opinion, you have a project that still has to go through environmental clearance, I think you're crazy to introduce that risk into this process because the state has enough good projects that don't have to go through environmental clearance.

The second point is -- and we all have to be sensitive to this -- there's a lot of things that are going on in parallel because we do not want, as John indicated to you, to lay all of these tasks that in the traditional process would all run behind each other, so we have to be very careful that things are going to happen very fast and communication is occurring on the fly, and we can't be too upset if the communication isn't as clear as we would like.

For example, we are working closely with John every single week, getting projects done, we have already triggered the public involvement process because under law we have a 30-day public involvement process, and we are briefing people as fast as we possibly can, but we will be done by the RTC meeting in March. Dallas-Fort Worth has to be completely done if we're going to meet the schedules that you have, and we've encouraged all our partners across the state to do the same. So that means instead of sub-allocating money to Dallas-Fort Worth, if we create a partnership and you do that in some of the other districts, that means we've got to all get on these weekly conference calls to get these projects to float to the top and include all of our local partners.

So our public meetings have already been advertised in the newspaper, were going out February -- I think it's 8th and 9th. RTC already knows they'll get briefed in February, staff is asking for action in March. Dallas-Fort Worth will be done by March, probably, within ten days of the bill, and we don't even have a bill yet. Normally you'd wait for a bill and we'd be done by the end of summer.

MR. HOUGHTON: Well, we know something is going to happen. I hate to keep belaboring this, but that 30 and 45 days sure chews up a lot of time.

MR. MORRIS: That's why John, in his leadership is encouraging all of us, keep going through your projects. He can't say it, I can say it, I wouldn't have projects that have to go through environmental clearance, get those particular projects, what percent are they designed -- I think they've got to be 90 percent designed because we're going to hand you, we hope, to you or our transportation partners, projects that are ready to be let so they've got to go out for letting, they've got to be out for X number of days so contractors can bid on them, and we want to make sure that those parts of the state that can get their projects ready so you can tick a box, we're 50 percent through. We've all got to pitch in to make sure that happens. But by the way, that's a nice problem to have.

MR. HOUGHTON: Coby, do you see us coming back here before February commission meeting to approve anything, or John?

MR. BARTON: Not that it's within my authority to do so, but I have asked Mr. Saenz to consider asking you to have a called meeting early in February. And this is the thought process: if we know the bill is expected to be signed on February 16, let's say, I think that the week before that we need to meet and present to you a list of prioritized projects, get some feel for where we're going to be, and make some decisions so that when the bill is ultimately signed, we can check it, make sure everything still lines up, and if it does, we've had a decision made and we can move forward with those final public involvement processes and start getting projects out for advertisement, federal letters of authority approved on them, contractors bidding on them. And we'll probably ask for your to support an abbreviated advertisement and letting process early on to meet that 90-day time frame.

MR. HOUGHTON: Thank you.

MR. HOLMES: John and Michael, just so you understand the direction that I was taking in respect of the maintenance questions, I was trying to figure out how much was left over for new capacity and mobility. And in looking at those other categories, my assumption was that we were actually allocating more to maintenance than that $500 million, that it was actually a bigger number than that, and I was trying to define that so that we really understood what was left over. And I do believe that rebuilding an 820 or a Katy Freeway -- as witnessed in the community where I live -- that, in fact, reduces a maintenance obligation that you would otherwise have, it replaces it.

It's a more complicated equation, but I want to make sure that: one, we are sensitive to our maintenance needs, but two, recognize that the amount of maintenance money that is going in is really bigger than what it appears. And so I want us to make sure that that balances appropriately.

MR. MORRIS: Commissioner, I think we're saying the same thing. I think our highest priorities should be safety and maintenance. There's three ways you can do maintenance: preventative, maintenance and rehab, and new construction. And all I'm saying is I don't think we, as staff, when we stand before you and say okay, if you fund this particular project or you fund -- we have two in February -- the two projects that the state is bringing to you in February, hopefully LBJ -- LBJ pavement is done. We don't do a good enough job explaining when we bring a capacity project, and oh, by the way, the pavement on that facility is 48 years old and failed and gets a certain grade, and by you approving these funds, you can bring mobility, reliability, safety and you can be meeting our maintenance obligations as part of the reconstruction of the project. That's all I was trying to say.

MR. HOLMES: And I support that and would hope, John, that you could help quantify that so that we understand that, in fact, we are addressing maintenance needs even though it's new capacity.

MR. BARTON: We'll work on that. Between Thomas Bohuslav, Ken Barnett, Tim Powers and David Casteel, I'm sure that we can come up with an answer for you.

MR. SAENZ: I think, Commissioner, once we identify the projects, we'll be able to break down a project that's a mobility project into how much of it is to reconstruct the existing, how much of it is to add the additional lanes, and then how many of those projects are strictly maintenance and quantify the numbers, have a complete breakdown of the packet.

MR. UNDERWOOD: And one other to reemphasize a point and whatnot, Mr. Morris, I agree with you that we need to work together on this. We just need to remember that because of the rural areas we have the cheapest food and fiber in the world as well as we provide multiple sources of energy for the whole state.

MS. DELISI: At this time I'm going to ask Amadeo to go a little bit out of order, just want to make sure everybody in the audience knows. We're going to go to agenda item 12(c). Representative Pickett has been waiting patiently and I know he's got to move on to other things, and then at that point we'll move on to 10(b).

MR. SAENZ: Commissioners, agenda item 12(c), Phil Russell will be presenting a minute order that authorizes us to enter into a project development agreement with the Camino Real Regional Mobility Authority for developing some projects in the El Paso area. Phil.

MR. RUSSELL: Good morning, commissioners, Mr. Saenz and Roger. For the record, I'm Phil Russell, assistant executive director for Innovative Project Development.

Quickly, commissioners, as you all probably recall, in August of last year a delegation from El Paso presented to you all their comprehensive mobility plan. That day you all authorized and requested that the RMA work closely with TxDOT in beginning to fill out and flesh out a game plan for developing this plan. The plan is very thorough, yet complex, and so in the intervening months we worked very closely, of course, with Chuck Berry, our district engineer, as well as Harold Hahn and Raymond Telles from the RMA.

Today is the first step in moving forward with individual elements of that project, and again, quickly, if you authorize this minute order, you would authorize the executive director to execute a project development agreement, and that agreement provides $2.2 million for the RMA -- up to $2.2 million to study the feasibility of developing three important projects on Loop 375. Again, the anticipation is that they'll be working on some financial, some feasibility, some construction costs with the idea of coming back to us with a recommendation of how to develop these three projects.

Mr. Saenz and commissioners, I'll be happy to address any questions you might have. I know Representative Pickett is here and I believe Raymond Telles is here as well.

MS. DELISI: Does anyone have any questions?

(No response.)

MS. DELISI: At this time I'd like to call up Representative Pickett, please.

MR. PICKETT: Good morning. Before I make my comments, I just have to go back to the Keep Texas Beautiful presentation. They made mention that one out of two Texans are still littering. My math means at least half of the commission is littering. Well, with Mr. Houghton's comment about not knowing he had a Keep Texas Beautiful segment in El Paso, I think he incriminated himself.

(General laughter.)

MR. PICKETT: And I'd also like to kind of just go back just a moment on the stimulus information. We actually had a little bit of this debate yesterday on the House floor and we were doing House rules, and there was an amendment passed that talked about any stimulus package -- and in it's our rules now -- has to go to the Appropriations Committee, and I wasn't real happy about that situation because I think there were some other issues going on at that same time. But this is going to become a little bit more controversial as it grows, if you listen to the morning news about who might want it, who might not want it, the accusations of pork in there, the rattling of the saber.

There was an amendment also put in there last night -- I think Coby could probably attest to -- that if certain states or certain leaders in those states refuse stimulus that a House concurrent resolution from the legislature would draw those monies because there's actually some talk yesterday that all this is for naught and the State of Texas may not get any stimulus money. I don't really believe that will be the end result, but there is a concurrent resolution being drafted by the legislature just to approve that.

I also want to echo the thanks to John Barton and his group. We are pretty much on daily phone calls. Our MPO has been meeting weekly. Commissioner Houghton tried to surprise me the other day and called me on my phone, thinking I wasn't working on it, and I put him on speaker and he found out I was at the MPO with our staff. And so this is something that, again, there's been a lot of cooperation.

This has also been a great exercise -- I heard that term before earlier, and I know, Madame Chair, that you've sent some recommendations up to the feds about how this is all working, how fast -- well, this has given us an opportunity to let you know about some of the things that we and the local level have been frustrated with the red tape as well, so I think that's not falling on deaf ears that time. I know we've had conversations and comments about the length of time to get consulting engineers onboard. It was mentioned the environmental -- I agree if it's not environmentally ready, don't even consider it.

One of the other things, of course, that we had to look at was whether we had the right of way available. We've got a project in El Paso that we had 75 percent of the right of way but not 100 percent of the right of way, but working with John Barton, we think we can get through that other last hurdle because it's an important project to us. So I would say if it doesn't have environmental right of way, it doesn't go on there anywhere near shape, form or fashion, so I appreciate that.

The projects today I'm here to support, the item 12(c), this is one of the transportation reinvestment zone projects, so this fits in with the leverage, and the Camino Real RMA is obviously doing the financing because the City of El Paso has chosen to do that, and it's something that if I think it's right, I'm going to get out there and profess that. These three projects have nothing to do with traditional tolls, these three projects have to do with the fact that the City of El Paso, in their infinite wisdom -- which surprised me -- has decided that the transportation reinvestment zone may be a way to go and their preliminary numbers are somewhere around $70 million.

To play off of that, your staff has also been good enough to get the City of El Paso yesterday, as you know, starting the information on these transportation development credits because the City of El Paso, this community will be putting up more money than they ever had in the past coming from non-state and non-federal funds, and if we can now go forward and get some of these development credits, that's going to even leverage more. So we're going to be prepared to keep changing our plans on a daily basis the more we learn about this, and these three projects are right in the middle of it.

And I appreciate the hard work, again, that our district engineer, our MPO have done. And our district engineer isn't here to say this -- and I don't speak for anybody but I do want to repeat something that he has said to me so I feel it's pertinent -- he believes this is the best communication that he's seen between Austin DOT, our local district, the MPO and our other partnerships in El Paso. So while we're on a roll, I would appreciate your approving this minute order.

And if you have any questions, other than that, I've got to go across the street and keep Texas safe. We've probably got birthday proclamations and anniversaries and business like that to take care of.

MR. UNDERWOOD: Representative, thank you. We appreciate your time and we appreciate your service to the state. Thank you, sir.

MR. HOUGHTON: Thank you for coming. It has been a labor of love over the last year or so on these projects and I appreciate your support.

MR. PICKETT: And it has, and again, Mr. Houghton, as you know, the initial lists that were going back and forth, you noticed there was a lot of maintenance, you're wondering about mobility, we've tried to work all that. There's been 300 lists going back and forth and I am worried sometimes about the one-size-fits-all as well, and when we get to the maintenance issue, I went out there and helped some people in El Paso had heartburn over another leverage project and it's going to be a traditional toll, but there are some additional benefits to that as we are going to reconstruct four lanes of existing roadway that are going to remain non-tolled with dedicated express lanes, and so it is important but we probably wouldn't have prioritized or done that reconstruction or maintenance if it wasn't at the same time. So there is a delicate balance there.

And then the leverage for our community is always going to be different. Without embarrassing anybody here, if we were all to put our financial statements down on the table, some of them would look a lot larger and the ability to leverage more than others. We're not going to have the same bonding capability in my community as others, so we're still not going to have the same amount of traditional leveraged projects as others. We have to just realize where our credit standing is and what we can actually afford.

So again, we're trying, we're trying, keep that in mind, and several years ago I said that I would support good, well thought-out plans, and I'm doing that, and I will not support plans that I don't think are in the best interest. And I think right now we've got a great synergy and we've got this comprehensive mobility plan that right now we're all onboard.

MR. HOUGHTON: Thank you.

MR. PICKETT: Thank you.

MS. DELISI: If there are no other questions, Commissioner Houghton, can I get a motion?

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. SAENZ: Thank you, Phil. Commissioners, we're going to move forward to agenda item 10(b), and Mark Tomlinson will present the minute order [Did not have microphone on.]

MR. TOMLINSON: Thank you. Good morning, Mr. Saenz, commissioners. My name is Mark Tomlinson, director of the Texas Turnpike Division. I think Mr. Morris set the stage very well for our discussion today, and we hope that with your approval we can help with the problem and the situation on the North Tarrant Express project. This is considered under our comprehensive development agreement program.

I'd like to talk just in general about the project as it is and a little about the scope. At this level, the scope was conceived in the region's metropolitan transportation plan that went into our program and then was morphed and kind of evolved as it went through the process, but as it exists today, this project involves Interstate 820. And Segment 1, we refer to there as Interstate 820, existing today are two general purpose, non-tolled, free to drive on -- Mr. Underwood -- lanes in each direction, it also includes two frontage road lanes in each direction, it's almost continuous but not completely through the length of the segment.

The proposal was to rehabilitate the two general purpose lanes, reconstruct them in each direction, add two new managed lanes in each direction -- these are managed lanes with dynamic pricing, they're not a traditional toll road, not a green field project by any stretch of the imagination, but managed lanes with the region's goal of maintaining a 50 mile per hour operating speed at any time of the day, so very, I think, innovative and pretty challenging as well. Also, the proposal would reconstruct and extend the frontage road lanes still not completely continuous but almost, and then in the future, add an additional general purpose lane as well in each direction.

Segment 2, existing today are three general purpose lanes in each direction, two frontage road lanes, also discontinuous. The proposal was to reconstruct those three general purpose lanes, add two new managed lanes in each direction, have future consideration -- it's in the long range plan -- for future widening, an additional managed lane, and of course, reconstruct and move out the frontage road lanes in each direction.

The CDA that we talk about is actually two comprehensive development agreements. The first, for Segment 1 and really as far into Segment 2 as possible, are full design-build-maintain-finance CDAs. The other part of the CDA in this project is master planning for the remainder of Segment 2 that we mentioned, and then 3 and 4. And to the region, all of this work is extremely important so we want to do as much as we can in terms of construction, but also move planning along as well, so the planning is extremely important as well. So the master planning contract would start immediately upon execution of the CDA, anticipate about a 12- to 18-month time frame to complete the master plan -- we'll actually pay for this work, it's capped at $2.5 million -- but we hope to come out of it with a master development technical plan and a master financial plan about how all the other project segments can be built and put under traffic.

So a little bit more about the North Tarrant Express project, the needs out there. This corridor is the most congested corridor in Tarrant County, definitely a high priority in the region. Just a little flavor of the traffic volumes: Interstate 820, Segment 1 carries about 130,000 vehicles per day; the State Highway 183 a little bit more than that; traffic toward Dallas-Fort Worth Airport, approximately 170,000 vehicles per day; and then the adjacent project, Interstate 35 West, approximately 100,000 vehicles per day. So the aim of the CDA, again, it's a little more flexible, a little less defined than our typical construction program was meant to address the highest traffic volumes in the region or in that particular area.

So going into the request for proposals, our estimate of the capital improvements on Segment and what we thought we could get was about $2 billion, long term maintenance and operation, and again, building on the discussion of maintenance costs today, anticipated in the CDA is that the developer will take over long term maintenance and operation of all the facilities they reconstruct and build new for this project, and that's estimated at about $450 million. So for that value, or that anticipated value, the region had committed up to $600 million in public funds.

So a little of the history and the way things proceeded. In May 2006, the RTC passed their managed lane tolling policy. That policy has been constructed into the contract documents in this CDA. In December of 2006, we issued a request for proposals and qualifications for the North Tarrant Express project. In June of 2007, we short-listed four firms through an iterative process. Two of those proposers fell out. It probably is important to note that while no one could have anticipated in December of 2006 the economic conditions and situations that would occur at the time we would bring these to close, that has created tremendous complications and difficulties for our team and for the developers in this process. Two of our teams did drop out and we were left with two proposals we received on December 1, 2008. So after evaluating those carefully, we're ready today to recommend an apparent best value proposer to you.

The two consortiums that did propose on the project: NTE Mobility Partners -- and there's a listing of all the firms involved, almost all of the firms involved in that partnership; and then OHL Infrastructure was our other consortium and there's a list of the firms involved in that proposal as well.

So kind of the nature of the competition, it was a very, very competitive process. The two CDAs, again, the concession CDA, design-build-finance-operate for a term of up to 52 years, reconstruction was a huge part of this program and I think the region, as we hear today, agrees that this is one of the probably highest reconstruction needs in the area, these corridors. It also includes tolling of the managed lanes and North Texas Turnpike Authority will do our toll collection services through agreement in the CDA.

Then the CDA for the remainder of the segments, whatever we can't get to in Segment 2 through 4, master planning effort, can be up to a ten-year initial term. They did, in fact, supply bids for different elements of the project that we'll have the opportunity to review and consider in the future. It's a partnership planning exercise with the goal, again, of looking at all the other segments in this region and try to essentially find a way to fund and build them in the future.

So to maximize value, the competition was formatted in terms of the Segment 1 was a mandatory proposal, to be responsive, they had to propose on Segment 1, and then go into Segment 2 as far as possible, using the available public funds and funding that could be generated from the managed lanes as well as any other financing they could bring to the table. Proposers had up to nine options on which they could propose. Also, there was competition on the concession technical proposal, and then the master planning elements as well.

We had a lot of folks, a lot of people within TxDOT, as well as our consultant partners involved in the evaluation of these proposals, it's an established program we've been through a few times, it's a very rigorous evaluation. The pass-fail responsiveness was done concurrently with evaluation of different aspects of the proposals. The subcommittees ultimately provided scoring recommendations to our ESRC, Evaluation Selection Recommendation Committee.

Scoring was thus -- again, in simple terms, whoever can build the most pavement is going to win this competition, we want to put improved pavement in the region -- so 80 points went to the financial score, essentially how much pavement can you build, 10 points on the concession technical score, 10 points on the planning portion for Segments 2 and 4, for a 100 percent total. And we had partners involved in the evaluation process, FHWA and the North Texas Council of Governments were observers in this process.

This picture probably tells the story better than any words we could use. Again, competition was how much can you build for the money we have and the money that can be generated out of the project. The NTE Mobility Partnership proposed what you see in the upper part of the slide which is in the light blue or mandatory part of Segment 1 is to reconstruct existing two lanes in each direction, general purpose lanes, rebuild them as general purpose lanes, add two managed lanes in that segment, rebuild and operate and maintain the frontage road lanes -- and in fact, there is some frontage road extension in that segment as well.

They also offered to move into Segment 2. Again, that is rehabilitation of the three existing general purpose lanes in each direction, adding the two managed lanes in that segment as well, rebuilding and reconfiguring frontage roads, with connections into the State Highway 121 and State Highway 183 interchange and also some reconfiguration in the Interstate 820 interchange there south. The pink highlights on the left side are direct connectors feeding from Interstate 35W into the managed lanes for that project.

Our other proposer, OHL, essentially covered the mandatory bid, they said they could make the light blue section work but were not able to go into Section 2. So with that, I think you probably know where we're going with our recommendation. We are recommending to you that the North Tarrant Express Mobility Partners have given us, we think, the best value proposal for this project and we recommend that you award that to that partnership today.

I do need to note that OHL was ultimately determined to be ineligible for the award. They failed to submit a valid proposal security which was a pass-fail measure in the evaluation, so we did evaluate their proposal because those evaluations went on concurrently. Theoretically, had they been eligible for the award, they still would have been ranked second. And kind of in simple terms, the NTE Mobility Partnership proposed 169 lane miles of roadway, OHL proposed 64 lane miles, since the competition was built around what can you build, that is how that resulted.

For comparison purposes, we did ask for kind of a representative case from our consulting partners and the Fort Worth District worked together to kind of construct for the scope that was presented in the NTE Mobility Partnership, had we approached that project kind of from TxDOT's perspective in a design-build procurement, what could we do, and the feeling was thus, that we could use the $600 million in public funds, the revenue generation portion of the project could probably secure about $700 million in debt, so to get to the full scope as proposed by NTE Mobility Partners, we would need a $700 million gas tax subsidy -- not that that was available, but theoretically, that's what we felt we would need. So that's another measure, I guess another perspective of how good a value we believe the proposal from NTE Mobility Partners is.

So again, to recap, the apparent best value proposal includes: extensive reconstruction of Interstate 820 and State Highway 183, State Highway 121; delivery of two new managed lanes throughout that entire corridor; direct connection ramps in the I-35W interchange; delivery of auxiliary lanes -- this is very important to improve the operation and safety on the existing general purpose, non-tolled lanes; we think this will be a big improvement, it is part of the project -- and reconstruction and improved extended frontage roads throughout the corridor; and of course, replacement of existing rail bridges as well.

So feeding from the master planning effort but included in the CDA are possibilities for future funding. The delivery of remaining interchange direct connectors in the I-35W and 820 interchange are possibilities. We have a cost for that and that will be developed further in terms of funding strategy. Delivery of an additional general purpose lane for Segment 1 is possible, and in fact, is required in the CDA. Delivery of a third managed lane for Segment 2 is possible and traffic will dictate a lot of that. If traffic is not high enough, it is required in the future in the CDA as well.

A huge portion, and cannot be understated, the operation and maintenance of this entire facility, as reconstructed and the managed lanes that are built new, will be taken over by the proposer and for the full term, up to 52 years, they will be operating and maintaining everything there. We'll have interoperability; any toll tag that can be used in Texas will work on these toll lanes. At the end of the concession period, there is a hand-back performance requirement. The planning CDA for Segments 2 through 4 require the developer to work with us to develop that master plan and just time lines we think should take about 12 to 18 months, and we hope to have future possibilities to bring to you out of that planning process. And to let you know, it is planning intended to be planning only. Any future construction that seems possible to come out of the CDA, we are requiring, through minute order, the need to come back to you for approval of that.

Tolling policy of the project was established by the region; the Regional Transportation Council established that managed lane policy. If you're interested in more details, that's their website. But the goal of the managed lanes is to maintain a 50 mile an hour operating speed so the tolls are managed dynamically throughout 24 hours a day toward that goal. So just to give you an example, under the anticipated -- by the proposer -- operating conditions in the opening year, estimated cost for users of the entire 13 miles that we're talking about in this corridor, peak rush hour toll could be around $6.50, and then the off-peak toll would be about $1.20. We need to note that the RTC policy allows a maximum toll rate of 75 cents per mile, so that's possible, but these are the rates that were set in the financial model by the proposer, and then, again, NTTA will do our toll collection services there.

Next steps, with your approval we hope to negotiate final terms in the spring of 2009, hope to have FHWA concurrence and also attorney general concurrence around that same time. We're required to give 30-day notice of information to the LBB and the State Auditor's Office -- we'll do that after, hopefully, approval -- and our goal will be Legislative Budget Board approval in the spring of 2009. We are required to have a public hearing in the region on this CDA and so that would be planned prior to final execution of the CDA which, again, we hope to have in the spring of 2009. If all that falls into place, construction could be started by the year 2010 and hopefully completed by the year 2015.

Probably by now these two proposals have been posted on our website and that is how you can access those. If you have any problem finding those, please let our staff know and we will help get you to those proposals.

With that, you have our recommendation and I'd be glad to try to answer any questions you might have.

MS. DELISI: Are there any questions for staff?

MR. MEADOWS: Certainly there may be some questions, but I just wanted to acknowledge that my hometown senator, Senator Wendy Davis, has joined us today, and although new to the Senate, she certainly is not new to the world of transportation, having served on the Fort Worth City Council, involved in the advancement of a major toll project, as well as serving on our RTC, and she may have some comments today, but I know she's been waiting very patiently and I'm glad she's here.

MS. DELISI: Senator Davis, would you like to come up?

SENATOR DAVIS: Thank you for recognizing me, Commissioner Meadows, and good morning to all of you commissioners, Mr. Saenz, Mr. Polson. It's my pleasure to be here today to show my support for this project.

As Commissioner Meadows mentioned, I was on the Regional Transportation Council for a number of years and this is a project that has had a priority in Tarrant County for over a decade. Special recognition should go to Mayor Oscar Trevino, who has represented the mid cities organizations at the Regional Transportation Council for a very long time, and under his leadership, this project has really been pushed forward.

Of course, our executive director, Michael Morris, did an excellent job of making sure that we matched our regional priorities and our plans to fund those priorities with the tools that were given to us by TxDOT and by the TxDOT commissioners. That is how we find ourselves where we are today and the recommendation of a managed lane project to help resolve the congestion problems that we see there.

I recognize that it's incumbent upon us at the state and federal levels to do our best to provide funding to our regions so that we don't require tolling in order to mitigate congestion everywhere that we find it, but for now we do the best with the tools that have been offered to us under the limited resources that we have, and I, understanding that, give this project, of course, my recommendation and urge your approval of the proposal that's been submitted to you today.

Thank you very much.

MS. DELISI: Thank you, Senator.

MR. HOUGHTON: Senator, let me ask you one question.

SENATOR DAVIS: Yes, sir.

MR. HOUGHTON: With your experience in transportation, are you going to be on the Transportation Committee?

SENATOR DAVIS: I've made that request. I hope if you have any pull with the lieutenant governor, you will help make that happen.

(General laughter.)

MR. HOUGHTON: This guy sitting next to me knows him very, very well.

SENATOR DAVIS: I hope that happens. Thank you.

MS. DELISI: Thank you. I'm sorry, go ahead.

MR. TOMLINSON: I should mention -- and it wasn't part of the proposal and I think it's interesting to the region and us as well -- we understand the Dallas Police and Fire Pension System has shown interest in this project and being an investor there. I hear it's pretty official, I can't state for sure that it is, but I just wanted to let you know I think there's interest in the region in this project in terms of investment possibilities, so I wanted to mention that to you.

MR. UNDERWOOD: I've got a couple of quick questions, I want to make sure I understand something a little more. There's actually no increase in free lanes originally. Is that correct?

MR. TOMLINSON: That's correct, yes, sir.

MR. UNDERWOOD: But there's the option of a free lane on the first segment within 20 years.

MR. TOMLINSON: Well, it's not an option, it will be built by 2030 at the latest.

MR. UNDERWOOD: And what's going to be the deciding factor of that then? What's going to be the driving for that free lane?

MR. TOMLINSON: The economics of the situation. It is a very competitive type situation when you have your managed lanes directly beside, just in very close proximity to the free or non-tolled lanes, so that in the early years will be a deciding factor, but it is a requirement of the CDA that they be built.

MR. UNDERWOOD: And the RTC has set the tolls, they're the ones that actually decided what the value is, what they should charge for it.

MR. TOMLINSON: Absolutely, following their rules.

MR. UNDERWOOD: I just wanted to reinforce that.

MR. TOMLINSON: Yes, sir.

MR. UNDERWOOD: Thank you.

MR. HOLMES: Just a couple of questions and comments. First of all, this looks like a great project, and I congratulate Michael and the RTC and our staff for bringing it forward and working it for the last couple of years. And I'm also particularly pleased that you have dynamic pricing. Do we have examples in Texas of dynamic pricing?

MR. TOMLINSON: To date, I don't believe so. I could stand corrected. I believe this will be the first.

MR. HOLMES: I don't think that we have any, and so I'm really pleased to see that this project has dynamic pricing. I think it will be very instructive for the rest of the state, and something I've been encouraging in other parts of the state. It hasn't worked so far.

The next is that I know that we have taken some interest rate exposure in this over this 270-day period, and I'm not attempting to unravel that agreement or portion of this proposal, but I would like for staff to look at ways to put caps on that in future transactions. I think this one looks manageable and so I'm not overly alarmed by it, but I do think it's important for us to look for ways to put collars around that exposure.

MR. TOMLINSON: Yes, sir, and we actually have begun that process on other projects, but we'll certainly take that and do that in the future.

MR. HOUGHTON: Go over the numbers again regarding the investment of tax dollars and private dollars.

MR. TOMLINSON: The public dollars available were $600 million. The proposal actually does not use all that money, they only propose using about $570 million, and that's kind of the base. The interest rate protection could affect that one way or another, but that is the proposal. So beyond that, again, it is estimated at this point in the proposal and our kind of review of that as well, but we think the value of what is proposed, as far as capital net present value around a billion dollars, operating and maintenance costs in the future about another $450- to $500 million, so difference between that $1.5 billion and the $570 million public subsidy is the amount that the private sector is bringing to that project, so it's very, very sizable.

MR. HOUGHTON: I think that needs to be illustrated as to the leverage effect that Michael, we've talked about over time. And the performance security put up on this?

MR. TOMLINSON: $50 million, I believe, and can be elevated.

MR. HOLMES: Well, I think it's important to note that it's a savings of $700 million of public money, and about the maximum amount of interest rate exposure might be $50- or $100 million, so there's still a huge net savings.

MR. TOMLINSON: Yes, sir, absolutely.

MS. DELISI: I think another way of saying it, that we're getting a $2.5 billion project for a $600 million investment?

MR. TOMLINSON: I think that's a pretty good way to say it, yes.

MS. DELISI: That's how I understand it.

MR. HOUGHTON: We've still got people to speak, not yet.

MR. MEADOWS: There's still some speakers.

MS. DELISI: We've got a couple of people. I'd like to, at this time, call up Mayor Trevino.

MAYOR TREVINO: Madame Chair, thank you so much. Commissioners and Amadeo and TxDOT staff, thank you for what you're doing, thank you for your service to the state.

I wanted to comment a little bit about this project and something the senator said and Commissioner Meadows said. He said she was involved in the RTC. Well, she sold herself short. She was the secretary, the vice chair and the chair and the past chair. She worked diligently through the process to make sure that the region had the best transportation system we can get out of it.

This project is the number one priority for the region, for the RTC, for the MPO, and before I continue, I'd like to show the level of support. I would like to ask the North Richland Hills City Council to please stand, if they would.

MR. HOUGHTON: Do you have a quorum?

MAYOR TREVINO: Actually, we've got a posted meeting. We've been down here talking to our legislature.

I would also like to ask those from the region, County Commissioner James from Collin County, and other folks from the region to please stand. County Judge, Mayor Tate from Grapevine, and Jungus. I think it's very important to know -- and Joe had to leave -- to see Collin County here in the interest of a project in Tarrant County makes a big statement.

We support the plan as presented, and even though we lose or we're not presently getting the third lane at this time on 820, a comment was made about the $700 million we're actually saving, a comment wasn't made about the extension of this Segment 1 and Segment 2 to include 183 all the way to 121 is a major deal for northeast Tarrant County. We really appreciate and agree with the eastern limit that includes our neighboring communities of Hurst, Euless and Bedford because they have been desperately needing the extension. Commuters on the North Tarrant Express have been waiting for help with the alleviation of congestion for many, many years, and we appreciate this day as the start of cleaner air and just one part of the congestion mitigation.

As you know, with the leadership of Councilman Jungus Jordan from Fort Worth and Linda Coop from Dallas, we are continuing to ask our legislators to allow us to have the authority to ask our citizens to vote additional funding services for commuter rail and transportation projects. This is just one leg of that. It helps clean our air and mitigate our congestion.

We, again, thank you for your service to the state and we hope you support the comprehensive development agreement on North Tarrant Express. Thank you so much.

MS. DELISI: Now I'd like to call up Councilman Jordan.

MR. JORDAN: Chair Delisi, members of the commission, my good friend, Bill Meadows, appreciate being here today. I am Jungus Jordan; I am a city council member in the City of Fort Worth; I also sit on the Regional Transportation Council; and as Oscar mentioned, I am chair of the Rail North Texas which is an effort to seek legislation to make our citizens a partner of yours in solving mobility and air quality issues in our region.

I would like to express my appreciation to the leadership of this commission, the director of TxDOT and your staff, Maribel Chavez and others, for helping us address the mobility and air quality problems in our city and in our region.

I would like to apologize for the frigid and icy weather, but after all, it is stock show time in Fort Worth.

In a very short time, through the leadership of this commission, you have helped us advance two of the three major critical legacy projects that affect our region, particularly the western part of the region, Southwest Parkway, with your approval today, the North Tarrant Express, and obviously I-35W continues to be a major concern of ours and this will help alleviate that issue.

We look forward to working with you to continue on that third let, the I-35W, the interchange, and how we can do that, we're working through our RTC to identify ways of possibly addressing that, but we are very, very elated on the effort and we encourage your participation and your positive vote on this issue today, and we appreciate the leadership that has been shown.

Mobility and air quality, I would be preaching to the choir if we talked about the economic importance of that to the regional and the national economic situation. But we appreciate your leadership and we stand ready to work in partnership with you.

And mentioning again, Rail North Texas, that is only a means to help work through as partners to bring local money to solutions that you're addressing very aggressively, and we appreciate your hearing us today. Thank you.

MS. DELISI: Thank you.

MR. HOUGHTON: Mark, can you put up the slide that shows the teams?

MR. TOMLINSON: Sure. That's NTE Mobility Partners, OHL.

MR. HOUGHTON: The one we're getting ready to vote on, that one.

Phil, how many other states are doing these size of projects right now? Have you heard around the country what's going on, or has transportation pretty much shut down because of lack of funds?

MR. RUSSELL: For the record, I'm Phil Russell, assistant executive director.

Commissioner, I'm thinking there are probably a half a dozen states that are actively involved in some form or fashion. Florida, of course, has been one of the early leaders, as well as Virginia. There certainly are some issues out there all the way across the country.

MR. HOUGHTON: Currently.

MR. RUSSELL: We have been pretty aggressive in trying to move in this direction.

MR. HOUGHTON: I'm going to surprise somebody. Jose Maria Lopez, can you come up? It's a little early, but I'm going to surprise you. We've been talking about economic stimulus on a federal level, and this project is about a two point what?

MR. LOPEZ: Two point five billion dollars.

MR. HOUGHTON: So this in itself, one project, how many miles?

MR. LOPEZ: It will be about 13 miles.

MR. HOUGHTON: I just want to give kind of a perspective of this project versus what we're hoping to get from the feds, but at the same time, when I look at your list of your partners here, how many people will be employed through the life of the construction of this project?

MR. LOPEZ: If awarded by the commission, the team will put together like 140 Texas companies to work. It is very difficult to guess. In real construction, direct construction, will be around 2,000 people for five to six years. If you account for all the engineering, additional services, it would be many, many -- somebody says 35,000 but that's over the board probably.

MR. HOUGHTON: I'm glad you're indulging me, Madame Chair, for doing this, but I just wanted to get a true perspective of what we're doing here in the state of Texas moving forward with CDAs and compare that to the federal stimulus that is hopefully coming our way. And I thank you, Jose, for indulging and allowing me to ask those questions.

MR. LOPEZ: Thank you, sir.

MR. HOUGHTON: Thank you.

MS. DELISI: Commissioner?

MR. MEADOWS: Madame Chair, I think Judge Whitley seems to be wanting to enlighten us in some way, and I wouldn't want to deny him that opportunity.

MR. HOUGHTON: He better be careful coming up.

JUDGE WHITLEY: I'll give it to you after I read my notes here first.

(General laughter.)

JUDGE WHITLEY: I also want to thank you for what you are about to do. I really believe you've found a way to squeeze blood out of a turnip. I mean, what we're looking at is something that we in the region have been trying to figure out the answer to for over 30 years, and I think the amount of work that all of you have done really behind the scenes, you don't get the credit all too often but you seem to get a lot of the blame from the other side of the street.

But we've had meetings with Commissioner Meadows and I know Commissioner Houghton, Chairwoman. It was mentioned earlier by Councilman Jordan, two of our major projects that you've helped us with tremendously in partnership with the NTTA, Southwest Parkway, you've done a tremendous amount of work there, both at the staff level as well as at the commission level here. This project that we're now talking about, the North Tarrant Express, I know next month we're hoping to be back here to talk a little bit about our third big project which is the connector in the north end of DFW Airport, and we hope that we can have success in that like we've enjoyed here.

But you've taken a project and through your hard work and through the staff level in working with the RTC, we've been able to basically more than double what we thought we were going to get, and that's as a result of bringing the private sector into this deal. So we've continued to be able to put the kind of money you're talking about which really would not have completely rebuilt the infrastructure that we have there right now, but by bringing the private sector in, not only are we going to rebuild all the infrastructure that we currently have but we're going to add to it.

And I think the addition of the frontage roads and the reconstruction and the improvements we're making there is going to relieve a great deal of the pressure off the current free lanes. As far as I know, this is the first project where you actually have managed lanes basically going in and out of free lanes, and so it's, I think, a high risk to the private sector and I think it's going to be very interesting to see how this all works itself out.

And again, I can't compliment you enough. I think all too often because we're there at the region and we're a lot of times making these announcements there, it seems to reflect more on the region than it does on folks like you and on your staff and on the boards and staff of our toll authority in that area, and we really want to thank you. And Commissioner Meadows, the work you've done on really all three of those levels. As councilman, you were involved with Southwest Parkway, on the NTTA board you carried the water on that, and we certainly appreciate that work.

And I also want to thank you for the work that you've done on the stimulus package because, again, we don't know what's going to come out of there right now. I think we all had hoped it was going to be a whole lot more for infrastructure than the $40 million, and if you listened to the news this morning, I think there are folks in Washington who wished there was a little bit more and may still be. And again pointing to conversations that we've had with your executive director, I believe you have positioned yourselves in a way that if some states aren't ready because they can't act fast enough, that Texas is going to be there with other projects that hopefully we can pull down those monies that are lost by the other states.

So again, this really is a historic day for the North Texas area. It would not have happened without your continual efforts at making it work and talking with the governor and working with everyone to really see this through, and I want to tell you how much, as a region, we appreciate this and the work that you've done in that area. Thank you.

MR. HOUGHTON: Thank you, Judge.

MS. DELISI: Thanks, Judge.

MR. HOUGHTON: He still owes me two dinners.

JUDGE WHITLEY: Well, I told Meadows bringing you home was supposed to have been one of those dinners, but obviously now I still owe you two and maybe a third one because he forgot you.

(General laughter.)

MR. SAENZ: Madame Chair. Judge Whitley, I want to thank you for setting up the meeting last Friday. You coordinated that meeting for us with several of the elected officials where we sat down and discussed all the projects and the status, and we appreciate that. One thing that I want to clarify, when we were talking last Friday on the frontage roads for this project, we talked about and said it was going to be three lanes in the frontage roads, there are two lanes reconstructed, they're being lengthened -- or extended is a better word, and then, of course, the main lanes are all being reconstructed also, auxiliary lanes are being constructed.

JUDGE WHITLEY: Well, as I looked through that, I did note that, but again, I think a lot of the congestion problems we have is because of those places where there is not existing frontage roads right now, and it's forcing those folks to get on the freeway if for nothing more than to go to the next exit and get off. And I can't tell you how often I have sat on 820 trying to figure out why the backup in one particular stop or another, with no accident, with no real incident. I believe it's those folks who are getting on at 30 to 40 miles an hour, driving 30 to 40 miles an hour, and getting off, and it miraculously clears up after you get past those areas where the frontage lanes didn't exist. So I think this is going to be a tremendous help, not only in the 820 area but also in the 121 area up to the 183 split. So again, thank you very much.

MR. SAENZ: Thank you, Judge. Like I said, I really appreciate the meeting and hope to see you next month.

JUDGE WHITLEY: You will.

MS. DELISI: So at this time, Commissioner Meadows, I'll entertain a motion.

MR. MEADOWS: I'd like to make a motion that we approve, and just in doing so, I'm certainly not going to make a long speech after all this because I think a lot of good people have said a lot of right things, but this really is an extraordinarily important step forward toward improving mobility in North Texas. And you know what is amazing to me about it is that I think Judge Whitley said it best a moment ago when he characterized the current 820 experience. I think the verb he used was sat. The fact is that that's what happens a lot on that roadway today -- and I know there are roadways like that across the state.

But I think it's important to note that this is one of the most important east-west thoroughfares on the western side of the Metroplex, connecting the east side of the Metroplex, and it truly is a gateway to one of the busiest airports in the world, and we are not providing the sufficient transportation infrastructure to serve the citizens that we all serve, and this is a great opportunity. Our staff is to be congratulated, local partners are to be congratulated, and our proposers are to be congratulated. Thanks.

MR. HOLMES: Was that a motion?

MS. DELISI: There was a motion at the beginning.

MR. MEADOWS: Thank you very much, Madame Chair.

MR. HOLMES: Second.

MS. DELISI: And I have a second. All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

Mark, I just want to say thank you to you and your staff. You did an excellent job on all this.

MR. HOUGHTON: Outstanding.

MR. SAENZ: Mark, can you get our staff that worked on this project to please stand up?

MR. TOMLINSON: Absolutely, and there are a lot of folks that are here but many that aren't who did a fantastic job throughout the course of the project.

(Applause.)

MR. SAENZ: We also had a lot of outside help, consultants and advisors, and I'd like them to stand up also -- I don't think they stood up, some of them did.

(Applause.)

MR. SAENZ: Thank you, Mark. You all did a great job.

MR. TOMLINSON: They'll probably charge more when you make them stand up.

MR. SAENZ: That was advertising, they're going to have to pay us for that.

(General laughter.)

MS. DELISI: At this time I'd like to take a 10- to 15-minute break because I know there's a press conference scheduled to discuss the commission's actions. So let's recess for about 10 to 15 minutes, see you back here at about 11:50.

(Whereupon, a brief recess was taken.)

MS. DELISI: It is now 11:56, and Amadeo, can we please return to the agenda?

MR. SAENZ: Yes, ma'am. Thank you, Madame Chair.

Moving on back to the agenda, agenda item number 4 deals with Aviation. Dave Fulton, Aviation Division director, will present two minute orders dealing with our Aviation programs. Dave.

MR. FULTON: Thank you, Amadeo. For the record, my name is Dave Fulton, director of the TxDOT Aviation Division.

Item 4(a) is a minute order that contains a request for grant funding approval for five airport improvement projects. The total estimated cost of all requests, as shown in Exhibit A, is approximately $6.6 million: $6 million federal and approximately $600,000 in local funds. A public hearing was held on December 11, 2009. No comments were received. We would recommend approval of this minute order.

MS. DELISI: Any questions?

MR. HOLMES: So moved.

MR. HOUGHTON: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. FULTON: Thank you. Item 4(b) is a minute order that contains a request for approval of the Aviation Capital Improvement Plan for 2009 through 2011. TxDOT is required by Section 21.109 of the Transportation Code to prepare and update annually a multi-year aviation facilities capital improvement program, a plan for general aviation airport development in Texas. The FY 2009-2011 plan includes approximately $226 million of general aviation airport improvement projects. Over the three-year period, this represents projected funding of approximately $156 million federal, $43 million state, and $27 million in local contributions.

A copy of the draft plan was mailed to airport owners for review and comments in June. No substantive comments were received. The Texas Aviation Advisory Committee approved the plan during their meeting on October 27, 2008. We would recommend approval of the FY 2009-2011 Aviation Capital Improvement Plan, and I'd be happy to attempt to address any questions you might have about it.

MS. DELISI: Are there any questions?

MR. UNDERWOOD: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. FULTON: Thank you.

MR. SAENZ: Thank you, Dave.

Commission, agenda item 5 deals with Public Transportation, and Eric Gleason will present a minute order dealing with the Job Access Reverse Commute Program.

MR. GLEASON: Good morning. For the record, my name is Eric Gleason, TxDOT director of Public Transportation.

Agenda item 5 awards $123,203 in Federal Section 5316, Job Access Reverse Commute, or JARC, funds to Colorado Valley Transit. This amount has become de-obligated from another JARC project and is available for reprogramming. Colorado Valley Transit has an existing JARC project in place that is similar in scope and can utilize the additional funding. The Federal Transit Administration has informed the department that the current de-obligated balance will lapse unless funds are reprogrammed. Staff recommends your approval of this minute order.

MS. DELISI: Is there a motion?

MR. HOUGHTON: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. GLEASON: Thank you.

MR. SAENZ: Thank you, Eric.

Moving on, agenda item number 6 deals with the Promulgation of Administrative Rules. Agenda item 6(a) deals with final adoption of rules. 6(a)(1), Suzanne Mann, interim Internal Compliance Office director, will present some rulers on Chapter 1 and 15 and 27.

MS. MANN: I'm watching the time, I can still say good morning, it's 11:59. Good morning. For the record, my name is Suzanne Mann and I'm the interim director of the Internal Compliance Program Office.

Before you is a minute order for final adoption of new rules Section 1.8 and 1.9 and amendments to Section 15.92 and 27.53, all relating to the Internal Compliance Program to be codified under Title 43, Texas Administrative Code, Part 1. These rules require transportation corporations and recipients of toll equity funding to have and enforce an ethics and internal compliance program by January 1, 2010 and provide that a contractor's adoption and enforcement of an ethics and compliance program is a potential mitigating factor for the imposition of sanctions on the contractor. No comments on the proposed new sections or amendments were received, and approval is recommended.

MS. DELISI: Questions? Is there a motion?

MR. HOUGHTON: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MS. MANN: Thank you.

MR. SAENZ: Thank you, Suzanne.

Agenda item 6(a)(2) deals with Environmental Policy, John Barton will present this minute order. Where is John? I saw him walk in.

MR. HOUGHTON: I saw him walk out.

MR. SAENZ: All right. In the essence of time, we'll table that for a second and let me go on to agenda item 6(a)(3) which deals with Chapter 5, Finance, and Brian Ragland will present that minute order for final adoption of rules.

MR. RAGLAND: Thank you. For the record, my name is Brian Ragland; I'm director of the Finance Division.

This is an amendment to our rules related to the collection of debts. Basically the main thing that it does is it requires us to send out notification that somebody owes us money instead of just start sending out demand letters, and there's a few other technical changes that bring it in line with the Attorney General's Office rules for collecting debts. Staff recommends your approval.

MS. DELISI: Is there a motion?

MR. HOUGHTON: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. SAENZ: John was working on the economic stimulus project so he's kind of multi-tasking.

MR. BARTON: I was actually trying to get maintenance numbers for Commissioner Holmes.

MR. SAENZ: Going back to agenda item number 6(a)(2) deals with Environmental Policy dealing with the development of off-system projects.

MR. BARTON: For the record, my name is John Barton, assistant executive director for Engineering Operations.

This rule is an amendment to allow that certain projects being funded by the department using the State Highway 121 regional toll revenue monies would not be held to the same standard for environmental review and public involvement. This is an item that was discussed at the October commission meeting in Dallas-Fort Worth. Staff was directed to develop this revision or amendment to the rules to allow for those off-system projects not to follow the same environmental and public involvement processes that on-system projects are required for. So staff recommends that you would approve this minute order.

MS. DELISI: Are there any questions?

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. SAENZ: Thank you, John.

Agenda item number 6(a)(4) deals with the final rules for the Pass-Through Toll Program, and Phil Russell will present this minute order.

MR. RUSSELL: Again for the record, I'm Phil Russell, assistant executive director for Innovative Project Development.

Commissioners, as you remember as we discussed last fall, the Pass-Through Toll Program has been very successful. Of course, due to some financing issues, we had to suspend the program about a year ago, but one of the things that came out over the last year or so is some discussion about providing a bit more structure with the program. These rules that are before you for final adoption would do just that. It provides a bit more clarity in a number of different areas.

First off, it would provide the flexibility for the commission to have a program call rather than a first-in/first-out type process. It would also provide critical flexibility as far as what components of an individual project we would reimburse -- to say it another way, if we had a program call, the commission could direct reimbursement for construction only or for construction and design, however you choose to slice the program. But again, I think it provides a bit more clarity as far as auditing and it probably would allow you to stretch your limited dollars a bit further. These rules also provide a bit more guidance to the applicants as far as what is required in the application itself.

Deadline for comments was December 15; we did receive three comments from Commissioner Ed Chance over in Montgomery County, from Jeff Curran at HDR, and former County Judge Jim Powers with Hays County. Mark Marek and I have met with all three of those groups and have discussed their comments and each issue. So staff at this time would recommend approval and we'd be happy to address any comments you might have.

MS. DELISI: Are there any questions? Can I get a motion?

MR. HOLMES: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. SAENZ: Thank you, Phil.

Agenda item 6(a)(5), John Campbell will present a final minute order for final rules dealing with a restructuring of our Outdoor Advertising Sign rules.

MR. CAMPBELL: Good afternoon. For the record, my name is John Campbell, director of the Right of Way Division. I'll present for your consideration today item 6(a)(5) which provides for final adoption of amendments to various sections of Chapter 21 of the Texas Transportation Code with regard to regulation of signs along interstate and primary highways and also with regard to the control of signs along rural roads. The purpose of the rule revisions are to provide for flexibility of alternatives as TxDOT prepares planning for restructuring the administration and reforms of our oversight of outdoor advertising.

We had an open comment period through January 5, no comments were received. We conducted a public hearing on the rule substance on December 16 and there were no public comments that attended. Staff recommends approval of final adoption.

MR. HOUGHTON: No comments?

MR. CAMPBELL: No comments, sir.

MR. HOUGHTON: Hard to believe.

MS. DELISI: Not a one.

MR. CAMPBELL: It was a surprise to me.

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. CAMPBELL: Thank you.

MR. SAENZ: Thank you, John.

Agenda item 6(b) deals with proposed adoption of rules, and Mark Marek will present proposed adoption of rules dealing with Chapter 2 and Chapter 11 concerning connections to our state highway system.

MR. MAREK: Thank you, Mr. Saenz. For the record, my name is Mark Marek; I'm the director of the Design Division for TxDOT.

This minute order proposes amendments to Section 2.1 concerning general and emergency action procedures for environmental review and public involvement requirements for transportation projects in conjunction with proposed repeal of Sections 11.56 and a new 11.56 relating to connection with regionally significant highways. Transportation Code Chapter 203 provides that the Texas Transportation Commission may lay out, construct, maintain and operate a state highway system. Transportation Code 201.604 requires the commission, by rule, to provide for the commission's environmental review of Department of Transportation projects that are not subject to review under the National Environmental Policy Act, or NEPA.

Senate Bill 792 of the 80th Texas Legislature granted local authorities the first option in building projects within their jurisdictions and provided these authorities with the powers to construct and complete those projects in a manner consistent with the practices and procedures by which the local authority finances and constructs or operates a project. Senate Bill 792 also authorized the department to assist those authorities in the completion of projects by providing the use of right of way owned by the department and access to the state highway system without requiring payment for those resources. Amendments to Section 2.1 allow local governments to follow their own environmental review for those projects; however, the amendments to 2.1 provide that in the agreement for project, the department must ensure that the entity responsible for the project complies with all state and federal environmental review and public involvement laws applicable to the entity.

Current Section 11.56 -- which this minute order proposes to repeal -- assigns broad environmental review and approval authority to the department. The rule change focuses on the environmental requirements to the project's connection point to the state highway system. New 11.56 provides a uniform means by which public and private entities may obtain permission to connect those facilities to the state highway system. This new rule will ensure that the proper statewide planning is employed in the construction of major highway facilities that connect to the state highway system. The requirement of compliance in the new rule ensures public involvement in the process and that the social, environmental and economic impacts of the connection are considered.

Staff recommends approval of this minute order.

MS. DELISI: Any questions?

MR. HOUGHTON: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. SAENZ: Thank you. Commissioners, I'm going to move on to item number 8 for the meantime as Steve is on a phone call right now, so agenda item 8 deals with Finance.

MR. HOUGHTON: Are we deleting item 7?

MR. SAENZ: No, sir. We will come back to it in a few minutes.

MR. HOUGHTON: I can make a motion. Can I, Madame Chair?

MS. DELISI: I will not recognize you for that motion.

Do you want to make a motion to vacate the chair?

MR. HOUGHTON: No, I wouldn't do that.

(General talking and laughter.)

MR. SAENZ: Brian Ragland will present a minute order under agenda item number 8(a) that authorizes the project selection process for the 2010 Unified Transportation Program.

MR. RAGLAND: Thank you. For the record, Brian Ragland, director of the Finance Division.

This minute order approves the project selection process. The commission conducted a public hearing on November 20 to receive testimony concerning the highway project selection process and the relative importance on the various criteria on which the commission bases its project selection decisions. There were no comments received at that public hearing and there were no comments received to us through the deadline of December 22. Staff recommends your approval of this minute order to approve the project selection process.

MR. HOUGHTON: There were no comments?

MR. RAGLAND: I looked back at prior commission meetings and it seems like that question gets asked every year that this is presented.

MR. HOUGHTON: Must be happy people. So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. SAENZ: Brian will now present agenda item 8(b) that deals with a request for approval of a variance in the way that money is distributed compared to how the federal government requires money distribution

MR. RAGLAND: Thank you. Brian Ragland, director of the Finance Division.

Item 8(b) seeks your approval for the department's variance from federal aid apportionment formulas when allocating funds to various parts of the state. The Transportation Code requires the commission to distribute federal aid transportation funds in a manner that's consistent with federal formulas that determine the amount that the State of Texas gets. However, by way of a minute order, the commission may vary from the distribution procedures and for particular justifications which are attached on Exhibit A. Exhibit A contains an individual evaluation of each of the federal aid apportionment programs and the justifications for any variances from those. Staff recommends your approval.

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. RAGLAND: Thanks.

MR. SAENZ: Thank you, Brian.

Agenda item number 8(c), James Bass will present an agenda item dealing with our bonding program.

MR. BASS: Thank you, Amadeo. For the record, I'm James Bass, chief financial officer at TxDOT.

Agenda item 88 deals with $100 million of variable rate debt that the commission has outstanding from the Texas Mobility Fund Bond Program. That particular series has DEPFA Bank as its remarketing agent, and a couple of months ago the commission allowed us to change that over to Bank of America. The liquidity provider is also DEPFA Bank and they've recently gone through some credit downgrades which has caused the rate to go up on these bonds. This minute order would allow us to terminate that liquidity facility with DEPFA Bank, replace it with an agreement with the Comptroller's Office, issue a remarketing memorandum for the debt and also any other necessary documents associated with that.

If I could, I would just like to highlight -- because it is somewhat unusual entering into a liquidity facility with the Comptroller's Office -- when the markets saw the disruption back September of last year, the Comptroller's Office reached out to a lot of the state issuers who have state GO debt to look at ways that they could assist and help lower our borrowing cost, and this is an example of that, and so we really appreciate their efforts. It's not something that's been done normally. The initiated the contact, reached out to us, and we certainly think once this is in place, it's going to lower our borrowing cost, so ultimately we can deliver more projects.

MR. HOUGHTON: Is that amount backstopped by the State?

MR. BASS: Right, and because the Mobility Fund already has a backstop of the state, if the credit quality of other providers was forcing it, we can replace it with a stronger credit quality, our own, the State of Texas, lower the cost, and if there ever was an issue, the State's full faith and credit was backstopping anyway.

MR. HOUGHTON: So moved.

MS. DELISI: Is there a second?

MR. UNDERWOOD: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. SAENZ: Thank you, James.

Commission, moving back to agenda item number 7, Steve Simmons, deputy executive director, will present two minute orders dealing with the implementation of the spirit of the Sarbanes-Oxley Act, or SOX. Steve.

MR. SIMMONS: Again for the record, I'm Steve Simmons, deputy executive director for the department, and yes, unfortunately I received a phone call from Representative Todd Smith whose district happens to lie right in the middle of the North Tarrant Expressway and I've been trying to brief him on it, and I'm pleased to say he is elated that the NTE was approved.

MR. HOUGHTON: Do you want to go call a couple of other representatives?

MR. SIMMONS: I've been trying to meet with them in the last couple of days and I think I've hit most of them, but this one is right in the middle of the 183/121.

MS. DELISI: Sorry, Steve, go ahead.

MR. SIMMONS: At the November 19, 2008 commission meeting, I made a presentation to you on the department's analysis of how we could implement the spirit of the Sarbanes-Oxley Act, or SOX, by formalizing policies relating to internal controls and professional responsibility. Agenda item 7(a), 7(b) and 78 together are a major step in that regard, and I will present agenda items 7(a) and 7(b), and I don't know if you did 78 yet, but the Chair, I think, will take care of that one.

The SOX Act was signed into law in July 2002 in large part as a response to the corporate and accounting scandals occurring in 2001 and 2002. The purpose of SOX was to broaden the roles of board members in overseeing financial transactions and auditing procedures and to enhance internal financial controls and professional accountability thereby increasing the reliability of financial information used by and provided to the corporate entity.

As I've mentioned before, SOX does not truly apply to government entities, only to publicly traded companies, and its provisions cannot be literally applied to a governmental entity. The spirit of SOX, however, can be implemented by adapting and incorporating some of the provisions in the TxDOT policies and procedures.

In regards to agenda item 7(a), Section 307 of SOX requires minimum standards of professional conduct for attorneys appearing and practicing before the Securities and Exchange Commission. These standards include reporting requirements when the attorney becomes aware of a material violation of security laws or similar violation by the company or the company's agent. The minute order before you as agenda item 7(a), a Policy for Attorney Responsibility, establishes a framework and guidelines for the general counsel to report to the executive director, the audit committee, the chair of the commission or to the attorney general, material breaches of a legal obligation or fiduciary duty or a violation of law by any officer, employee or agent of the department.

Staff recommends approval of this minute order, and Bob Jackson and I are available to answer any questions you may have regarding this minute order.

MS. DELISI: Any questions?

MR. HOLMES: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. SIMMONS: Thank you. In regards to agenda item 7(b), Section 302 of the SOX requires the principal executive officers and principal financial officers to make certain certifications regarding financial reports. Section 404 of the SOX sets out requirements for an internal control report and Section 406 of SOX requires that a code of ethics be adopted for senior financial officers.

This minute order, Responsibility for Financial Reports and Internal Control; Code of Ethics, implements the principles of these three provisions of SOX by directing the chief financial officer to develop a code of ethics for senior financial personnel and to implement policies and procedures, first, that expand the practice of providing certifications by the executive director and chief financial officer for financial reports, and two, that address the internal control structure and procedures for financial reporting.

Again, staff recommends approval of this minute order, and Bob Jackson, James Bass and I are available to answer any questions you may have regarding this minute order.

MS. DELISI: Questions? Is there a motion?

MR. MEADOWS: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. SIMMONS: Thank you.

MR. SAENZ: Thank you, Steve.

MS. DELISI: Various provisions of SOX require that public companies have an audit committee with procedures for handling complaints regarding accounting and auditing issues and other matters and for interactions with outside and internal auditors. So at this time I would like to appoint an audit subcommittee whose duties will include helping to ensure the department complies with the spirit of SOX as to the reliability and transparency in financial reporting, and the independence of the department's internal audit program, working with the Finance Department and Audit staff and general counsel attorneys to establish procedures for handling complaints, and working with the general counsel to develop procedures for reporting certain breaches of legal or fiduciary duties.

And at this time I would like to appoint Commissioners Ted Houghton and Fred Underwood to serve on the audit committee, with Commissioner Underwood serving as the chair.

MR. HOLMES: So moved.

MR. MEADOWS: Second.

MR. SAENZ: This is a directive.

MS. DELISI: This is a directive, but I would like the record to reflect that if there were a vote, it would pass.

(General laughter.)

MR. SAENZ: Thank you, Madame Chair.

Agenda item number 9, Brian Ragland will come up again and present a minute order dealing with our State Infrastructure Bank for the City of Weatherford.

MR. RAGLAND: Thank you. Brian Ragland, director of the Finance Division.

This is final approval of a SIB loan to the City of Weatherford allowing them to borrow $320,000 for some utility relocations along US 180. They had originally been approved for $240,000 back in 2002, and I believe at the last commission meeting you rescinded that original minute order, so this is a new one for $320,000 and staff recommends your approval.

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. RAGLAND: Thanks.

MR. SAENZ: Thank you, Brian.

Agenda item 10(a), Mark Tomlinson will come back to the podium and present a minute order authorizing the executive director to enter into an agreement with Harris County concerning the right of way for the Beltway 8 project.

MR. TOMLINSON: Yes, sir. Good afternoon, Mr. Saenz, commission. My name is Mark Tomlinson, director of the Texas Turnpike Authority Division.

Item 10(a) removes the area between the existing frontage roads on Beltway 8 from 0.15 mile east of old Humble Road to 0.88 mile south of US 90 East from the state highway system and authorizes the executive director to enter into an agreement with Harris County for the use of that state-owned right of way to develop, construct, operate and maintain the Beltway 8 toll project as part of the county road system, and for the county to reimburse the department in the amount of about $5.5 million for the use of the right of way on that project.

Commission approval is required to remove the state-owned right of way from the state highway system in order for Harris County to use the right of way to develop, construct, operate and maintain the Beltway 8 toll project as part of their system. Staff recommends approval of the minute order.

MS. DELISI: Any questions?

MR. HOLMES: So moved.

MR. HOUGHTON: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. SAENZ: Thank you. Agenda item 10(b) has been done. Agenda item 10(c), Mark will present a minute order to the commission requesting your acceptance of the final general engineering consultant report for the CTTS project.

MR. TOMLINSON: I think you have a copy of the report in your packet. Item 108 requests your acceptance of that final GEC consultant's quarterly progress report for the Central Texas Turnpike Project as of November 30, 2008. Estimated completion cost is currently $396 million lower than the original GEC projection, so that would bring the current cost estimation to be about $2.55 billion compared to the $2.94 billion originally listed in the GEC report. Construction is now complete, so with that, the final GEC report is appropriate. There is still fiscal responsibility for the system to reserve funds for right of way payments and contract disputes that may be ongoing, but all portions of the CTTP are now open to traffic, that includes nine sections of State Highway 45 North and Loop 1, along with four segments of State Highway 130.

MR. HOUGHTON: How long do we have to reserve, James or Mark, the fund and the amount?

MR. TOMLINSON: Don't have a definitive time frame. Those right of way condemnation cases can go on for a while and the dispute is in some stage of resolution -- I'm not sure exactly which, but if anyone else has a better answer.

MR. HOUGHTON: Do you know the amount of the reserve amount?

MR. SAENZ: Let us get that information, Commissioner, and we'll send it out.

MR. HOUGHTON: I mean, congratulations to all those involved, this is the final report. Correct? We've completed it, it came in, what, $400 million under what we had thought, design-build.

MR. TOMLINSON: Under budget and it was ahead of schedule, as you recall.

MR. HOUGHTON: That should be reflected.

MR. TOMLINSON: Very, very successful project.

MR. SAENZ: It was really completed ahead of schedule, but if you recall, part of this project was delayed when the lawsuit for the 45 Southeast portion came about. We could not make those final connections on the south side and could not move on a large portion of this project, that's why it did take a little bit longer, but the project would have been completed way before the latter part of last year.

MR. HOUGHTON: And another question, when will the connector back to 35, the 45 Southeast be completed?

MR. TOMLINSON: The 45 Southeast project itself should start the construction --

MR. HOUGHTON: No, the connector.

MR. SAENZ: No. The 45 Southeast, sir, should be completed by about April of this year is the report that I got.

MR. HOUGHTON: So we'll have a true connection south of Austin.

MR. SAENZ: Yes, sir, we will have and will be able to open that facility. There will still be some work going on but substantial completion that would allow for the facility to be opened will be around April of this year -- which is also ahead of schedule.

MR. HOUGHTON: Hopefully we'll see some type of traffic relief on 35.

MR. SAENZ: I would project that we will see a lot more traffic diversions from 45 over to State Highway 130.

MR. HOUGHTON: That's a bad word, diversion.

MR. SAENZ: Traffic movement.

MR. HOUGHTON: Congratulations to all involved.

MR. TOMLINSON: Staff recommends acceptance of this report.

MR. SAENZ: Thank you, Mark.

MR. HOUGHTON: Do we have to approve?

MS. DELISI: Yes.

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. SAENZ: Thank you. Agenda item number 11 is an agenda item presented by John Barton again, requesting your approval for some additional work under the Prop 14 program.

MR. BARTON: For the record, I'm John Barton, assistant executive director for Engineering Operations.

As you will recall, back in October of 2008 at the commission meeting in Dallas we brought before the commission a minute order to approve funding for several much needed transportation projects around the state using Proposition 14 bond proceed funds for those projects, and we have been diligently getting those projects ready to award to contract, and in fact, some of those have moved forward.

Today this request is being brought forward to you, this minute order would authorize the department to use approximately $213 million of additional Proposition 14 bond proceeds to fund the engineering work necessary for a series of projects across the state that have been identified by the MPOs, as well as our own staff, as high mobility projects in our metropolitan areas, our urban areas and in some of our connectivity areas. For instance, this would allow us to complete all the engineering work necessary to expand Interstate 35 from the Austin area to the Interstate 35 East and West Y there in Hillsboro there through the Waco District so that we can be positioned to move forward with the construction of those much needed projects when additional funding does become available.

I apologize for having to amend the exhibit to the minute order that has been presented to you. There were a couple of projects that were identified as extreme priorities for the state late in the game, early this week, and so I believe that Roger has handed out to you a new page 1 of 3 and page 2 of 3. The difference I'll note is a project in the Fort Worth District, it has to do with the North Tarrant Express project that you took action on earlier today and it is to provide $12 million for the general engineering contract to oversee the management of that comprehensive development agreement for the department. And then also we increased the dollar values on two of the projects in the Waco District on Interstate 35 having to do with what is shown as I-35 Segment 1C and I-35 Segment 3B, I believe -- excuse me -- 3A-1 and A-2 which is shown on page 2 of 3, and those increases will allow us to get those projects designed and ready to move forward as potential economic stimulus package projects, as we have been discussing earlier today.

So again, approval of this minute order would allow the department to commit the dollar amounts shown on these three sheets of paper as Exhibit A to the engineering consultants that are working with us to develop these projects that are specifically in pages 1 and 2 of 3, and then on page 3 of 3 two specific engineering contracts that we have for services across the state to help us get much needed mobility and congestion relief projects designed and ready to move forward should Proposition 12 be funded by the legislature or additional funding be made available to us through revenue enhancements. So staff recommends your approval of this minute order.

MS. DELISI: Questions?

MR. HOUGHTON: So moved.

MR. MEADOWS: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. BARTON: Thank you.

MR. SAENZ: Thank you, John.

Agenda item number 12, Commission, Jim Randall will present a minute order requesting your approval of an appointment to the Austin-San Antonio Intermunicipal Commuter Rail District.

MR. RANDALL: Good afternoon, commissioners. My name is Jim Randall with the Planning and Programming Division.

Item 12(a). State law requires the commission to appoint two public members to the Austin-San Antonio Intermunicipal Commuter Rail District. The other board members are appointed by the member cities, counties, transit organizations and metropolitan planning organizations. Currently the board has 20 members. Due to his exemplary service, staff recommends that Mr. Mariano Camarillo be appointed for a fourth term which expires in January 2011. Staff recommends approval of this minute order.

MR. HOUGHTON: So moved.

MS. DELISI: Is there a second?

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. SAENZ: Thank you, Jim. Agenda item 12(b) will also be presented by Jim Randall, that deals with the award of transportation development credits.

MR. RANDALL: In May 2008, the Capital Area Metropolitan Planning Organization authorized $10 million of its federal Surface Transportation program funds to study commuter rail between Austin and San Antonio. The funds will be used for the district for preliminary engineering, operations modeling, public involvement and environmental clearance related to the implementation of the Austin-San Antonio Regional Passenger Rail project.

This minute order authorizes the use of $2 million in transportation development credits to be used by the district as local match for funds received from CAMPO. The department received a letter from CAMPO supporting the reward of transportation development credits for this project. Staff recommends approval of the utilization of the transportation development credits in support of this project.

MS. DELISI: Is there a motion?

MR. HOUGHTON: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. RANDALL: Thank you.

MR. SAENZ: Thank you, Jim.

Agenda item number 13, commission, is a report from James Bass on our fiscal year 2009 Obligation Limits.

MR. BASS: Thank you, Amadeo. Again for the record, I'm James Bass, chief financial officer.

This is another installment in our monthly report and update to the commission on our fiscal year 2009 Obligation Limit of $2.53 billion. Through the month of December, we will have obligated about $575 million of that. That will increase dramatically in the next couple of months as the comprehensive development agreements and the public equity going into those projects get moved onto the books as a commitment, that will jump up. That's a large portion of the $2.53-.

One of the other things that I've updated you on during this time is the revenues and the assumptions behind the $2.53 billion. The motor fuels tax, we now have our deposit for January and it's still bad news but it's not any worse than it was last time we visited. The trend of being in the neighborhood of 3-1/2 to 4 percent less than was received one year prior continued for January. Some of the early information on the traffic counts that we've received from the Transportation Planning and Programming Division for the month of December was one of the first months in the last eight or so where those traffic counts were actually higher than they had been previous 12 months. So we may, because of the time lag of the taxing and the deposit of those gas taxes, hopefully in coming months we'll see that begin to trend upward.

Again, we spoke last month about operational costs and reductions that the department was undertaking to maintain the $2.53 billion. As I stand here today, it seems like we are still in good shape with those reductions to attain the $2.53-, and with that, I would be happy to answer any questions that you may have. I do not believe this is a minute order, merely delivering of a report and addressing any questions that you may have.

MR. HOLMES: James, the January numbers were actually from fuel purchases in November. Is that right?

MR. BASS: Correct. And not fuel purchases at the pump but higher up the delivery chain.

MR. HOLMES: At the rack, yes.

MR. BASS: When it's taxed in November, it's remitted to the Comptroller in December and then deposited to the Highway Fund and Education in January, so roughly a two-month lag.

MR. HOUGHTON: We're seeing obviously flat revenue, but Amadeo was talking about -- and I guess we'll get into in a minute when Thomas comes up here -- our cost for construction is down too, we're seeing lower numbers.

MR. BASS: Yes.

MR. HOUGHTON: So we have kind of a double-edged deal going here.

MR. BASS: Right.

MR. HOUGHTON: Are we saving more money?

MR. BASS: The projects are coming in less than the engineers' estimates, I believe, overall. The trend of the Highway Cost Index over the last couple of months has been coming down. I think it's kind of good news/bad news: with the economy down and we're not awarding as many projects, you have more competition on the projects that are going forward; more competition generally leads to lower prices, and I think that's a lot of what we're seeing or have seen in the past couple of months. A higher number of bidders on the projects than has been the historic average -- again, Thomas can speak to that better than I can -- and therefore, the prices have come down.

MR. HOUGHTON: But there are a couple of lines going on here: you've got your construction down and --

MR. BASS: And revenue down.

MR. HOUGHTON: Not as much as construction.

MR. BASS: With fuel, petroleum which is a large component of a lot of the work that we have done coming down, that has also, I would imagine, influenced the bid prices on the contracts. Thank you.

MR. SAENZ: Thank you, James.

Agenda item number 14, Thomas Bohuslav will present two minute orders dealing with our highway maintenance and construction contracts and building contracts.

MR. BOHUSLAV: Good afternoon, commissioners. My name is Thomas Bohuslav; I'm the director of the Construction Division.

Item 14(a)(1) is for consideration of the award Highway Maintenance and Department Building contracts let on January 13 and 14, 2009. We had 23 projects; the average number of bidders for the maintenance projects was 4.9; we did have an underrun on maintenance projects. Staff recommends award of all the projects for maintenance and building projects. Any questions?

MS. DELISI: Questions?

MR. HOLMES: Yes. Thomas, can you give us a little color on the way that the bids are coming in currently relative to a year ago?

MR. BOHUSLAV: First off, our projects are smaller. When projects are smaller, they're shorter term, and so a year ago we had more larger projects so contractors' prices reflect more recent numbers. If you have a five-year project, they have to put the numbers in for what they project their costs to be five years from now, so there is some impact of duration of project on the lower prices that we have now. Fuel prices are down and that is reflected in the bid prices we're seeing as well. There's different values that contractors may use, 2 percent of the job to 1 percent to 3 percent of the job maybe fuel costs, so there is some reduction in prices for fuel, and again, those are for normally shorter term projects.

Other prices are down. Asphalt, right now we're letting a lot of asphalt type projects because that's a lot of the smaller type work that we do to repair and maintain pavements out there. Asphalt has come down some from last summer, maybe $100 a ton as a base price for asphalt versus $600 a ton is what we normally would be paying last summer, so it's come down some but not like fuel, prices are still a little bit high for asphalt. So overall, yes we are down.

The Highway Cost Index that we have right now is a little unusual in regard to the numbers that we're putting in that calculation software in that we have unusual projects now, primarily asphalt projects, and so the numbers are a little bit unreliable, more unreliable. But the trend is down, maybe 5 percent overall from the past summer.

Probably the primary contributing factor, though, is that we do have a lot of competition, you know, six bidders per project on construction projects and contractors are trying to keep their crews. If they lose a crew, it's difficult to get them back, they want to hold them over until maybe some of this other money comes out, whether it be Prop 14 or whether it be stimulus projects, so they try to hold onto those crews and get jobs that they can to keep those crews busy so they can roll them over to when more money is coming out. So that's another impact that you might see.

Now, I'm not the expert in all that, I'm talking to contractors and they're telling me kind of what's going on right now, and what we're seeing from districts as well. So does that help you?

MR. HOLMES: Yes. Just listening to James a minute ago, it sounded like we might be short at least $50-, probably more like $100 million in this fiscal year on our fuel tax receipts, and I was wondering to what extent that would be made up in cost reductions.

MR. SAENZ: Just looking at this month's letting, we had based the $2.5 billion letting based on engineers' estimates. Our engineers' estimates for the projects this month was almost $177 million, they came in at $135-, so we saved $41 million.

MR. HOLMES: That would be basically half of the shortfall.

MR. SAENZ: Yes, that makes half of our shortfall.

MR. HOLMES: And what I was trying to understand from Thomas was were those unusual projects and therefore not representative of what may happen over the balance of the year, or was that a trend that might well continue?

MR. HOUGHTON: The question is what has been the trend on the under? I don't remember.

MR. SAENZ: I believe last month we were like 13 or 14 percent. We've been under.

MR. HOUGHTON: How many months?

MR. BOHUSLAV: We've been under for sure since last summer; there might have been one month when we were up, but generally we've been under significantly, 5 percent to 10 percent.

MR. HOUGHTON: So we could say we're picking up some obligation.

MR. SAENZ: Yes, sir.

MR. HOUGHTON: On a net basis.

MR. SAENZ: And the intent was that if our revenues came in that we could still let that amount, then the districts could have added more projects to reach that. Now we'll be able to see based on the loss of revenues, we can't maybe make that $2.5- so we may not be able to add more projects, but we're making up the difference in the underruns that the contractors are providing.

MR. HOLMES: In spite of the fact that this month was unusual in respect of the size of the projects and the composition being more asphalt. The way you described it was that it was a fairly unusual mix of projects because they were small.

MR. BOHUSLAV: That's been the case for a while now, a lot of projects have been small. Our largest projects have been our seal coat projects or preventive maintenance projects as of late, and those are generally smaller projects. Even last fall when we let those seal coat projects, they ended up being some of the bigger projects we had in the letting, actually which they're not normally the case. Our prices have come down even on those type projects from last fall until today, so asphalt has come back some. So the trend is down, it is short term projects, but I believe overall if you were to mix in some larger projects, we'd still have better prices, and fuel is one good indicator of what prices should be.

MR. SAENZ: I think, commissioner, in the report that James will present next month, we will get him to summarize kind of where we're at with respect to our entire letting for the year versus what it has actually let for and see how much savings we've realized and then how much of that has been taken up by change orders and final estimates so that we'll find out exactly where we're at with our original goal.

MR. BOHUSLAV: We need to award the maintenance projects.

MR. HOUGHTON: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. BOHUSLAV: And now we do the construction projects. Item 14(a)(2) is for the consideration of award or rejection of Highway and Transportation Enhancement Building Construction contracts let on January 13 and 14. We had 43 projects; an average of 6-1/2 bidders per project -- and not that long ago, our average bidders were 3-1/2 per project or say or maybe even lower in some cases; and Amadeo did mention the significant underrun on our construction projects here, 23 percent. And summary of that again is fuel, primarily, and a few other material prices out there as well. Staff recommends award of all projects.

MR. HOLMES: So moved.

MR. HOUGHTON: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. HOUGHTON: I think Bass may be squirreling some money away.

(General laughter.)

MR. SAENZ: Thank you, Thomas.

Agenda item number 15, commissioners, deals with all our Routine Minute Orders, and the staff would recommend that you approve all minute orders at once, and we'll be happy to answer any questions should you have any on any of them.

MR. HOUGHTON: So moved.

MR. MEADOWS: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes.

MR. SAENZ: That is the agenda, Madame Chair.

MS. DELISI: This completes all the items on the posted agenda. Is there a need for an executive session?

MR. SAENZ: No, ma'am.

MS. DELISI: If not, we will enter into the open comment period of the meeting. Are there any speakers signed up for open comment?

MR. SAENZ: No, ma'am.

MS. DELISI: Is there any other business to come before the commission? There being none, I will entertain a motion to adjourn.

MR. HOLMES: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: The motion passes. Please note for the record that it is 12:44 p.m. and this meeting stands adjourned.

(Whereupon, at 12:44 p.m., the meeting was concluded.)

C E R T I F I C A T E

MEETING OF: Texas Transportation Commission
Special Meeting
LOCATION: Austin, Texas
DATE: January 29, 2009
I do hereby certify that the foregoing pages, numbers 1 through 157, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Nancy King before the Texas Department of Transportation.





2/03/2009
(Transcriber) (Date)

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Austin, Texas 78731





 

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